The Federal Reserve is seen taking its benchmark policy rate upward after a government report Friday showed U.S. employers hired more workers than expected last month, but also signaled some signs of slack in the labor market.
Futures contracts that settle to short-term U.S. interest rates added to losses immediately after the report, as traders priced in a bigger chance of higher interest rates, and then reversed course. The unemployment rate rose to 3.7%, from 3.5%, the report showed.
Futures prices currently reflect close to even odds of a half-point rate hike versus a 75-basis point increase in December, about the same as seen before the report, and a subsequent continued march upward into next year, to a policy rate in the 5.00%-5.25% range.
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