Chances of an October Fed rate cut rise on recession fears

• US ISM Manufacturing hit 10-year lows, triggering recession fears. 
• The probability of an October Fed rate cut has jumped to 64.7%. 

The odds of the Federal Reserve cutting rates in October have increased sharply in the last 24 hours on the US recession fears. 

The fed funds futures market now points to a 64.7% chance of a quarter-point rate cut at the Fed’s October meeting. 

Traders were pricing in 40% chance of a rate cut ahead of Monday’s US ISM Manufacturing release. 

The key gauge of US manufacturing published by the Institute for Supply Management (ISM) came in at 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction.

The data bolstered the US recession fears, forcing markets to price in a higher probability of an October rate cut. 

The Fed cut rates twice in the second quarter and is now expected to deliver another 25 basis point rate cut in October.