Traders now see a 22.4% chance of a quarter-point rate hike by the Federal Reserve in June, down from 35.6% a day ago, after talks on the debt ceiling reportedly stalled on Friday. Meanwhile, traders priced in a 77.6% likelihood that Fed policy makers will leave rates between 5% and 5.25% next month. Traders appeared to be more influenced by the debt-ceiling developments than they were by remarks by Fed Chairman Jerome Powell, who said that the benchmark interest-rate target may not have to rise as much as it otherwise would because banks are tightening credit. All three major U.S. stock indexes, along with Treasury yields like the 2- and 10-year rates, were lower after reports on the debt-ceiling developments.

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