Fed funds futures traders briefly priced in an up to 30% likelihood of another quarter-of-a-percentage-point rate hike by the Federal Reserve in June, following Tuesday’s data which showed a slight rebound in April retail sales. That likelihood, up from 20% a day ago, was accompanied by a more than 60% chance of a Fed pause in June and July, which would leave the fed funds rate target between 5% and 5.25%. Treasury yields broadly rose, led by the 1-year T-bill rate, on the view that the retail-sales report signaled inflation pressures could persist. Last week, on May 11, traders were pricing in an up to 50% chance of a rate cut in July on regional-banking woes.
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