Stocks, bonds cautiously hopeful Fed will deliver

SYDNEY — Share and bond markets seemed guardedly optimistic on Monday that the US Federal Reserve would deliver a much-needed rate cut this week, though the meeting looks set to be one of the most fractious in recent memory.

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Futures imply around an 86% chance of a quarter-point reduction in the 3.75% to 4% funds rate, so a steady decision would be a seismic shock, A Reuters poll of 108 analysts found only 19 tipping no change, and the rest a cut.

“We expect at least two dissents in favor of no action and that only a slim majority of the 19 Fed participants will indicate in their updated dots that a December cut was appropriate,” wrote Michael Feroli, head of US economics at JPMorgan, ina note.

The Federal Open Market Committee has not had three or more dissents at a meeting since 2019, and that has happened just nine times since 1990.