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58bp Of ’24 Fed Cuts Now Priced Vs. 50bp Ahead Of CPI

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The unequivocally soft CPI data drives dovish repricing in Fed funds futures, leaving ~23.5bp of cuts priced through the September meeting and ~58bp of cuts priced through year end. That compares to ~18.5bp and ~50bp heading into the release.

  • Sep meeting pricing moves to levels not seen since May 16, while year-end pricing has moved to the most dovish levels seen since April 10.
  • The report comes after Fed Chair Powell pointed to data coming into better balance earlier this week.
  • At this stage, we suggest that the July meeting (decision due July 31) will likely provide the launch pad for the idea of a September cut, assuming data continues to point in that direction in the interim (PPI data is due on Friday, while PCE data is due on July 26).
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The unequivocally soft CPI data drives dovish repricing in Fed funds futures, leaving ~23.5bp of cuts priced through the September meeting and ~58bp of cuts priced through year end. That compares to ~18.5bp and ~50bp heading into the release.

  • Sep meeting pricing moves to levels not seen since May 16, while year-end pricing has moved to the most dovish levels seen since April 10.
  • The report comes after Fed Chair Powell pointed to data coming into better balance earlier this week.
  • At this stage, we suggest that the July meeting (decision due July 31) will likely provide the launch pad for the idea of a September cut, assuming data continues to point in that direction in the interim (PPI data is due on Friday, while PCE data is due on July 26).