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Traders' bets now indicate market pricing of a bumper rate cut
have shot up, with chances of a 50-basis point cut standing at
41% compared with 14% seen on Thursday, according to CME's
FedWatch Tool.
Former New York Fed President Bill Dudley said there was a
strong case for a 50-bps interest rate cut.
"If pricing stays where it is currently, it would be the first
meeting in years where there's serious uncertainty about the
rates decision," Deutsche Bank analysts said.
"A couple of articles were published in the Wall Street Journal
and the Financial Times suggesting that a 50 bps move was still
in play, which has led markets to once again re-evaluate their
expectations."
The dollar came under pressure against major global peers, while
yields on U.S. government bonds eased across the curve.
Bets of the Fed sticking to a smaller 25-bps cut when it meets
on Sept. 17-18 had firmed on Thursday following a slightly
higher producer prices report, which came on the heels of the
August consumer prices data.
Meanwhile, Boeing fell 3.9% in premarket trading as its U.S.
West Coast factory workers walked off the job early on Friday
after overwhelmingly rejecting a contract deal.
Later in the day, the University of Michigan will issue its
consumer sentiment survey for September around 10 a.m. ET (1400
GMT).
Wall Street's main indexes had closed higher in the previous
session, boosted by rising megacap stocks, keeping all three
U.S. benchmarks on track for weekly gains.
At 05:06 a.m. ET, Dow E-minis were up 32 points, or 0.08%, S&P
500 E-minis were up 8.5 points, or 0.15%, and Nasdaq 100 E-minis
were up 14.5 points, or 0.07%.
Futures tracking the economically sensitive Russell 2000 small
cap index were up 0.6%.
Among individual movers, Adobe slid 8.3% after the Photoshop
maker forecast fourth-quarter earnings below analysts'
estimates, signaling stiff competition and soft demand for its
AI-integrated editing tools.
Moderna eased 3.5% a day after its shares slid more than 12%
when the vaccine maker pushed back its break-even goal by two
years and predicted 2025 sales below its forecast for the
current year.
U.S. equities saw their biggest outflow since April in the week
till Wednesday, according to a report by Bank of America.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Shounak
Dasgupta)
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