Swap contracts show that the probability of the Federal Reserve cutting interest rates by 50 basis points this week has exceeded 50%.

Bond traders are again betting that Federal Reserve policymakers are more likely to cut rates by 50 basis points than by 25 basis points at this week's meeting. Swap contracts tied to the Fed's rate decision show a more than 50 per cent chance of a 50 basis point cut this week, compared with last week when traders all but ruled it out. That pushed the two-year U.S. yield back to its lowest level in two years and dragged the dollar index to its lowest level since January.
Philip Marey, a senior U.S. strategist at Rabobank, wrote that he expected the Fed to implement a standard 25 basis point rate cut. "Powell's lack of guidance may indicate that the FOMC has not reached a consensus. More importantly, Tuesday's retail sales could still change market expectations." (Jin Ten)