The market is betting on a 50-50 chance of three Fed rate cuts this year.

According to Odaily, inflation data released on Friday came in lower than expected, prompting a rise in U.S. Treasury prices and fueling investor expectations for three Federal Reserve rate cuts in 2026. The yield on the two-year U.S. Treasury note, which is most sensitive to changes in central bank policy, fell as much as 6 basis points to 3.40%, hitting its lowest level since last October before narrowing slightly. After the data was released, traders priced in about 63 basis points of rate cuts for the year—suggesting a roughly 50% probability of a third 25 basis point cut by year-end, in addition to two already priced-in cuts, compared to Thursday’s pricing of 58 basis points. Regarding January’s non-farm payroll data, traders earlier this week had already stopped fully pricing in a 25 basis point rate cut by mid-year, pushing their bets back to July. Wall Street banks that previously forecast a rate cut in March have also postponed their expectations to later in 2026. (Golden Ten Data)