NEW YORK: US short-term interest rates futures jumped on Monday as traders increased their bets the Federal Reserve would embark on a series of rate cuts starting next month to avert a recession due to growing global trade conflicts and sluggish inflation.

St. Louis Federal Reserve James Bullard said on Monday a rate decrease may be "warranted soon."

Bullard's view of a likely imminent rate cut came after the Institute for Supply Management said earlier Monday its gauge of domestic manufacturing activity fell to its weakest level in 2-1/2 years in May.

In late US trading, federal funds futures implied traders saw about a 67% chance the US central bank would reduce key short-term borrowing costs by a quarter point to 2.00%-2.25% at its July 30-31 policy meeting. This was higher than 53% on Friday and 18% a week earlier, CME Group's FedWatch program showed.

Fed funds contracts suggested traders are pricing in an 86% chance of at least one more rate decrease, in addition to the possible one in July, and a 55% chance of at least two more rate cuts by year-end.

Going into mid-2020, the fed funds complex implied traders expect a 24% probability the central bank would reduce key borrowing costs to 1.00%-1.25% or lower, which is more than 1 point lower than its current target range of 2.25%-2.50%.

Fed policymakers will next meet on June 18-19.