: Traders see nearly 1-in-3 chance of half-point Fed rate increase in March after PCE data

Fed funds futures traders see a 32.9% chance of a half-a-percentage-point rate increase by the Federal Reserve in March, up from 27% a day ago, following January’s PCE inflation data. Such a move would take the fed funds futures rate target to between 5% and 5.25% by next month. In addition, traders factored in a greater likelihood that rates could get to around 6% by July, lifting those odds to 7.6% from 4.2% a day ago. The PCE data, which showed the Fed’s preferred inflation gauge jumping, also caused Treasury yields to rise across the board, sending the policy-sensitive 2-year rate to 4.78% in morning trading.

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