Fed funds futures traders boosted their expectations for a pause by the Federal Reserve through at least June on Thursday, after March’s producer price index showed the sharpest monthly decline in almost three years. The chance of a pause, which would keep the fed funds rate target at between 4.75% and 5%, was seen at 42% for May, up from 29.6% a day ago, and 35.7% for June versus 27% previously. Traders are also factoring in a 94.7% chance of a reduction in rates by year-end, according to the CME FedWatch Tool. Treasury yields were broadly lower after the PPI report, led by a decline in the 2- and 3-year yields.
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