What is the probability of the first US interest rate cut in June?

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Traders Assign a 71 Per Cent Probability to a June Interest Rate Cut

Traders are now assessing a 71 per cent likelihood of the Federal Reserve implementing its first interest rate cut in June. This represents a notable increase from the 56 per cent probability observed at the beginning of the week, as indicated by the CME's FedWatch Tool. This shift in sentiment suggests growing confidence among market participants that the central bank will move towards easing monetary policy in the coming months.
Increased Certainty of Summer Rate Cuts

The market's expectation for rate cuts in the summer has gained traction, providing a significant boost to the ongoing bull market. Analysts attribute this to the increasing certainty surrounding potential summer rate reductions and a diminished outlook for further substantial increases in bond yields. This environment has offered fresh impetus for market participants to remain invested.
Broader Market Performance and Sector Movements

Despite some early trading fluctuations, major US stock indexes were on track for strong weekly gains. The Dow Jones Industrial Average was nearing its 40,000-point mark, and both the Dow and the S&P 500 were poised for their best weekly performances of the year. The tech-heavy Nasdaq was also set for its strongest week since mid-January, buoyed by a rally in chip stocks following positive forecasts from Micron Technology. However, early trading saw some sectors, including consumer discretionary, trading lower, with rate-sensitive megacap growth and technology stocks experiencing a dip.
Notable Company-Specific Movements

Individual stock performance varied significantly. Tesla saw losses early in the session, reportedly due to reduced production at its China plant, though it was still positioned for a strong weekly gain. Nike experienced a notable decline after issuing a warning about shrinking revenue in the first half of fiscal 2025. Conversely, FedEx experienced a jump in its stock price after exceeding quarterly profit expectations, with its Express unit showing improved operating margins. Digital World Acquisition also saw gains ahead of a shareholder vote on its merger with a media company associated with former US President Donald Trump.

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What is the probability of the first US interest rate cut in June?

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