Rate futures traders slash bets on Fed rate hikes

© Reuters/Brendan McDermidFILE PHOTO: The Federal Reserve Board building on Constitution Avenue is pictured in Washington

(Reuters) - Traders of futures on U.S. interest rates slashed bets the Federal Reserve will begin raising rates next, after a government report showed U.S. employers added just 266,000 jobs in April, far fewer than the nearly 1 million expected.

Eurodollar futures indicated traders see less than a 50% chance of short-term interest rates rising by a quarter of a percentage point next year, down from well over that before the report. The Fed typically raises rates in quarter-point increments. Traders also pulled back on rate hike expectations further out.

(Reporting by Ann Saphir; Editing by Toby Chopra)