LONDON (Reuters) – Futures contracts tied to the U.S. Federal Reserve’s policy rate suggested on Monday that benchmark interest rates will peak in January 2023 compared to February last week.
As well as peaking a month earlier than previously anticipated, markets bet the Federal Funds target rate will be roughly 20 bps lower at 3.38% compared to 3.59% at the beginning of last week.
A scaling back in market bets on when U.S. rates will peak follows weak business activity data on Friday that has raised the spectre of recession.
U.S. Treasury Secretary Janet Yellen said on Sunday a recession is not inevitable but most economic data has been pointing the other way, including last week’s dismal PMI readings in the United States and Europe.
Investors widely expect the Fed to raise interest rates by another 75 bps when it concludes a two-day policy meeting on Wednesday.
(Reporting by Saikat Chatterjee; editing by Dhara Ranasinghe)
