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MONEY MARKETS-Traders pare U.S. rate-hike bets as jobs data disappoint
April 7, 2017 / 1:49 PM / 8 months ago

MONEY MARKETS-Traders pare U.S. rate-hike bets as jobs data disappoint

(Updates market action, adds quote)

NEW YORK, April 7 (Reuters) - U.S. interest rates futures rose on Friday as traders dialed back bets on the Federal Reserve raising interest rates following a disappointing payrolls report for March.

U.S. employers hired 98,000 workers in March, the fewest in 10 months and far short of an 180,000 increase forecast among analysts polled by Reuters.

Some analysts blamed the poor payrolls reading partly on harsh weather that hurt home building and store sales. They expect a possible rebound in hiring in April.

“Weak readings in the construction and retail sectors likely owed something to Winter Storm Stella,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions in Washington. “It would not be a surprise to see a strong bounce back in April, as well as upward revisions to the March figure.”

The sharp decline in the jobs gain last month was offset by a drop in the unemployment rate to 4.5 percent, a near decade low, and a 0.2 percent wage gain that was in line with forecasts.

The relatively meager hiring last month, coupled with jitters following a U.S. missile strike against Syria on Thursday, led traders to reduce bets on Fed raising rates in the coming months.

Some Fed officials in recent days said two more rate hikes by year-end following a March increase would be appropriate if the economy improves further.

Federal funds futures implied traders saw roughly a 66 percent chance the U.S. central bank would raise interest rates to 1.00-1.25 percent at its June 13-14 policy meeting, down from 71 percent late on Thursday, CME Group’s FedWatch program showed.

They suggested traders priced in a 36 percent probability the Fed would hike rates to 1.25-1.50 percent at its September meeting, compared with 38 percent late Thursday.

Fed funds futures implied traders expected a 56 percent chance the central bank raising rates to 1.25-1.50 percent in December, down marginally from Thursday. (Reporting by Richard Leong; Editing by Chizu Nomiyama)

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