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STIR: 25bp Fed Cut Seen Locked In Today, Shallow Path Thereafter

STIR
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  • Fed Funds implied rates are little changed overnight, with a 25bp cut today seen as locked in (24bp priced) but a subsequent 25bp cut only fully priced for the June FOMC.
  • Cumulative cuts from 4.58% effective: 24bp Dec, 28bp Jan, 40bp Mar, 47bp May and 56bp June.
  • Further out, the SOFR-implied terminal of ~3.85% (broadly 75bp of cuts including today’s) continues to point to a markedly shallower easing cycle than the 2.75-3% median dot in the September SEP.
  • The median analyst sees the FOMC rate “dot” for 2025 upped by 25bp (i.e. one less cut) to 3.6%, with a range of opinions including unchanged at 3.4% and +50bp to 3.9%. Analysts are almost unanimous that the longer-run Dot will be raised from 2.9%, to either 3.0% or 3.1%.
  • MNI Fed Preview: https://media.marketnews.com/Fed_Prev_Dec2024_With_Analysts_5b1eec4e36.pdf
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  • Fed Funds implied rates are little changed overnight, with a 25bp cut today seen as locked in (24bp priced) but a subsequent 25bp cut only fully priced for the June FOMC.
  • Cumulative cuts from 4.58% effective: 24bp Dec, 28bp Jan, 40bp Mar, 47bp May and 56bp June.
  • Further out, the SOFR-implied terminal of ~3.85% (broadly 75bp of cuts including today’s) continues to point to a markedly shallower easing cycle than the 2.75-3% median dot in the September SEP.
  • The median analyst sees the FOMC rate “dot” for 2025 upped by 25bp (i.e. one less cut) to 3.6%, with a range of opinions including unchanged at 3.4% and +50bp to 3.9%. Analysts are almost unanimous that the longer-run Dot will be raised from 2.9%, to either 3.0% or 3.1%.
  • MNI Fed Preview: https://media.marketnews.com/Fed_Prev_Dec2024_With_Analysts_5b1eec4e36.pdf