Traders up bets Fed won't hike rates in May, cuts to begin in summer


(Reuters) – The Federal Reserve is seen done raising interest rates and starting to cut them in the summer, after a government report on Tuesday showed U.S. job openings in February dropped to the lowest level in nearly two years.

Prices of fed funds futures after the monthly Job Openings and Labor Turnover Survey, or JOLTS report, was released reflected a jump in bets by traders of rates remaining unchanged in May.

Traders now currently see a roughly 57% probability of no move following the May 2-3 meeting, compared to about a 43% change the day before. They forecast about a 43% change of a 25 basis point rate increase.

The Fed is also seen starting to ease policy as early as July, cutting its benchmark rate to near 4% by the end of the year, based on pricing of interest-rate futures.

(Reporting by Lindsay Dunsmuir and Ann Saphir; Editing by Franklin Paul)

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