Fed funds futures traders boosted the likelihood of a July rate cut by the Federal Reserve, following data that showed the annual U.S. headline inflation rate cooled for April. Traders saw a 34.5% chance of a quarter-point rate cut that would take the fed funds rate down to 4.75% and 5%, after factoring in a pause at between 5% and 5.25% in June. That compares with a 29% likelihood seen a day ago. Meanwhile, they saw a 57.6% chance of a July pause and a 7.9% likelihood of a quarter-point hike that month. Traders were clinging to a decent chance of a July Fed rate cut even though analysts said Wednesday’s consumer-price index for April pointed to persistent inflation and the need for higher-for-longer interest rates. Treasury yields were broadly lower in Wednesday morning trading, led by declines in rates on the 2-month and 1-year T-bills and 3-year note.
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