May 1, 2019

Bets are increasing that the Fed will cut interest rates

Dion Rabouin

Fed Chair Jerome Powell. Photo: Mandel Ngan/AFP/Getty Images

Investors are raising their expectations that the Federal Reserve will cut rates at least once this year, ahead of today's Fed policy meeting.

Driving the news: Fed funds futures prices show traders see a 65% chance the Fed cuts rates at least once this year and a greater than 20% chance of 2 rate cuts, according to CME Group's FedWatch tool. Bets on more than 1 rate hike have picked up notably over the past month.

  • "Markets have frequently underestimated Federal Reserve actions over the last few years, but lately the skepticism has been striking," LPL Financial chief investment strategist John Lynch said in a note to clients.

Flashback: The Fed forecast raising rates 3 times coming into 2019 and had predicted 2 rate increases as recently as January.

  • Axios reported in March that White House economic adviser Larry Kudlow wanted the Fed to cut U.S. interest rates by 50 basis points. Trump has ratcheted up those calls ever since.

The bottom line: Most investors say they don't believe Trump's pressure is going to influence the Fed, but bets have risen that the Fed will cut rates as Trump has increased calls for them.

Go deeper: The Federal Reserve looks to be laying the groundwork for interest rate cuts

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Heat wave melts 20% of snow cover from Antarctic island in days

The effects of February's record heat wave on Eagle Island in Antarctica. Photo: NASA

Antarctica's Eagle Island now has a side that's almost ice-free following this month's searing heat wave, images released by NASA show.

Why it maters: "The warm spell caused widespread melting on nearby glaciers," NASA said in its report. It's the third major melt event of the 2019-2020 Southern Hemisphere summer, following warm spells in January and last November, according to the United Nation's World Meteorological Organization (WMO).

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Bernie Sanders wins Nevada caucus

Democratic presidential candidate Sen. Bernie Sanders waves to supporters at a campaign rally on Friday in Las Vegas. Photo: Mario Tama/Getty Images

Sen. Bernie Sanders is projected to handily win the Nevada Democratic primary caucus, becoming the clear frontrunner among 2020 Democratic presidential primary election candidates.

Why it matters: Nevada is the first state with a diverse population to hold a nominating contest, highlighting candidates' abilities to connect with voters of color — particularly Latino voters.

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South Korea and Italy see spikes in coronavirus cases

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

The novel coronavirus has spread to more nations, and the U.S. reports a doubling of its confirmed cases to 34 — while noting these are mostly due to repatriated citizens, emphasizing there's no "community spread" yet in the United States.

The big picture: COVID-19 has now killed at least 2,362 people and infected more than 77,000 others, mostly in mainland China. New countries to announce infections recently include Israel and Lebanon, while Iran reported its sixth death from the virus. South Korea's confirmed cases jumped from 204 Friday to 433 on Saturday and Italy's case count rose from 3 to 62 by Saturday.

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