August 1, 2014 / 12:51 PM / 3 years ago

Traders pare bets on earlier 2015 Fed rate hike

(Reuters) - U.S. short-term interest-rate futures contracts rose Friday after a government report showed weaker-than-expected job growth in July, prompting traders to pare bets the Federal Reserve may raise interest rates sooner than previously thought.

The contracts show markets are now assigning a roughly 51 chance of a first Fed rate hike in June 2015, based on CME FedWatch, which tracks rate hike expectations using its Fed funds futures contracts. Before the report traders saw a 58 percent chance of a June 2015 rate hike, and a 41 percent chance of a hike in April 2015.

Traders now see just a 26 percent chance of an April 2015 rate hike.

The Fed has targeted short-term rates of between zero and 0.25 percent since December 2008. This week it reiterated plans to keep them there for a “considerable time” after it ends its bond-buying program this fall.

Reporting by Ann Saphir Editing by W Simon

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