Fed's November Rate Cut Probability at 100%: Strategies for What to Do

The data released by the U.S. Department of Labor shows that the U.S. CPI rose by 3.3% year-on-year in May, lower than the market's expected 3.4%; the U.S. CPI grew by 0% month-on-month in May, also lower than the expected 0.1%; the core CPI increased by 3.4% year-on-year in May, below the expected 3.5%, marking the lowest level in over three years.

Following the release of the U.S. CPI data, swap contracts were repriced, reinforcing expectations for a rate cut by the Federal Reserve. Interest rate futures suggest that there is about a 70% chance of the Federal Reserve cutting rates before September and a 100% chance of a 25 basis point rate cut in November. Traders have fully factored in the possibility of a rate cut by the Federal Reserve in November and expect two 25-basis point rate cuts within the year.