Traders slash October Fed rate-cut bets after soft data, bond quarter turns ugly

Markets pulled back sharply from bets on an October rate cut by the Federal Reserve, according to wire data from the latest session, as softer economic readings and dovish remarks from Fed officials scrambled expectations. The repricing came in the same window that a market wrap described as a 'cruel quarter for bonds,' underscoring how unsettled fixed-income investors have been through the third quarter. In currency markets, the dollar held near a two-month high while Asian currencies traded mixed; the yen rebounded even as the broader dollar index stayed firm. That combination — a strong dollar alongside falling rate-cut odds — points to investors reassessing how much easing the Fed will actually deliver this year. What remains unresolved is which data point moved the needle most. The wire items describe 'soft data' and 'dovish comments' without specifying the release, leaving traders to wait for the next inflation or labor report to confirm whether the pullback in cut bets sticks.