The CME Group FedWatch probability for a September rate hike dropped after the August jobs report missed expectations.
Nonfarm payrolls came in at 151,000 for the month of August, below economist predictions for 180,000, according to a consensus estimate from Thomson Reuters.
Traders tracked by the CME now see about a 18 percent chance of a September rate hike. They sat at a 27 percent chance before the report, but dropped as low as 12 percent after.
Before the jobs report, the market estimated a 57.6 percent chance of a December rate hike, but those predictions, which dropped as low as 51.2 percent, now sit near 53.5 percent.
Thirty-day fed funds futures prices are widely considered a reliable indicator of U.S. monetary policy changes. CME’s FedWatch tool tracks the target rates based on fed funds futures contract prices.
A reading above 50 percent indicates the market’s guess for the next rate hike.
After the jobs report, odds dropped in all months tracked by the CME:
- September: 18 percent, down from 27 percent prior to the 8:30 a.m. ET report.
- November: 24.8 percent, down from 31.6 percent
- December: 53.5 percent, down from 57.6 percent
- February 2017: 56.2 percent, udown from 59.3 percent
- March 2017: 62.1 percent, down from 64.8 percent
- May 2017: 63.7 percent, down from 66.2 percent
- June 2017: 68.8 percent, down from 70.8 percent
- July 2017: 69.6 percent, down from 72.4 percent