Traders are betting the ECB will follow the Fed in cutting interest rates by 50 basis points

Money markets upped their bets on the Federal Reserve easing far more than policymakers expected. Soon after, they also upped their bets that the European Central Bank would follow the Fed's lead in cutting rates. Traders now see a 60 per cent chance of the ECB cutting rates by 50 basis points in September after fully digesting expectations that the Fed would cut rates by 50 basis points in September. Meanwhile, the chances of a 25 basis point cut by the Bank of England are rising. These bets are likely to continue, increasing safe-haven buying of bonds amid a general flight from risky assets.