Rex Nutting: Investors are nuts to think a July interest-rate cut is a slam dunk

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Sometimes a sure slam dunk turns into a brick clanking off the rim.

The markets have gotten so used to the Federal Reserve doing whatever it takes to keep asset prices rising that traders and investors are now expecting the Fed to go against its own judgment and aggressively cut interest rates next month.

In putting a 100% probability on a cut in the federal funds target rate at the next Fed meeting on July 30 and 31, traders — and the economists who advise them — seem to have forgotten how language and math work. Not to mention economics.

Comments by Fed Chairman Jerome Powell in the past 10 days have indicated that the Fed is open to cutting rates if necessary to keep the expansion going, but there’s no sign that policy makers have made up their minds about a July cut — or any cut at all, for that matter.

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