Money market durable goods data raise bets on us rate hike

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NEW YORK Aug 26 A surprise July increase in U.S. durables good orders rekindled bets the Federal Reserve would raise interest rates by year-end as the U.S. economy showed resilience in the face of weak global demand. In the over-the-counter market, overnight indexed swap rates implied traders see a 30 percent chance the U.S. central bank will end its near-zero interest rate policy at its September 16-17 meeting, up from 26 percent from Tuesday.

These overnight rates that gauge traders' expectations on interbank borrowing costs implied a 62 percent likelihood the Fed would raise rates in December, up from 54 percent on Tuesday.

The Commerce Department said on Wednesday durable goods orders gained 2.0 percent in July, following an upwardly revised 4.1 percent increase in June. Economists polled by Reuters had forecast a 0.4 percent decline last month.