Detail from the front of the United States Federal Reserve Board building is shown in Washington

Traders keep bets on Fed rate hike in December, but barely

(Reuters) – Traders pared bets the Federal Reserve will move to raise U.S. benchmark interest rates even by the end of the year, after a U.S. government report on Friday showed job gains this year have slowed.

The U.S. short-term interest-rate futures contracts rose after the Labor Department report, with traders seeing a 51 percent chance that the first Fed rate hike will come in December 2015, based on CME FedWatch, which tracks rate hike expectations using its Fed funds futures contracts.

Before the report, traders were more convinced a rate rise would come by the end of a year, giving a December rate hike a 62 percent chance. Job gains for March were revised sharply downward, dragging the three-month average increase to 191,000, below the April reading of 223,000.

“The revision to (March) is certainly significant,” said Uri Landesman, president of Platinum Partners in New York. “I think this is consistent with most of the data that has been coming out: the economy is slowing a bit, job creation is slowing a little bit.”

The Fed has kept short-term rates near zero since December 2008.

(Reporting by Ann Saphir; Editing by Paul Simao)


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