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STIR: Back To Only Just Fully Pricing Second 25bp Cut At May FOMC

STIR
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  • Fed Funds implied rates for upcoming meetings continue to see a sizeable dovish impact from yesterday’s CPI print, which included a pronounced slowdown in rental inflation, but have mostly reversed their decline in mid-2025 contracts.
  • Whilst a Dec cut is now seen as a shoe in, the subsequent 25bp cut is back to only just fully priced for the May FOMC.
  • Cumulative cuts from 4.58% effective: 24.5bp Dec, 29bp Jan, 44bp Mar, 51bp May and 61bp Jun.
  • Today sees PPI and jobless claims in focus, with the former watched for its usual core PCE implications. That’s likely doubly so this month with a wide range of analyst estimates after CPI, and revisions from pre-CPI estimates moving in different directions (CIBC and Wrightson ICAP see core PCE at 0.3% M/M, Morgan Stanley 0.136% M/M). 
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  • Fed Funds implied rates for upcoming meetings continue to see a sizeable dovish impact from yesterday’s CPI print, which included a pronounced slowdown in rental inflation, but have mostly reversed their decline in mid-2025 contracts.
  • Whilst a Dec cut is now seen as a shoe in, the subsequent 25bp cut is back to only just fully priced for the May FOMC.
  • Cumulative cuts from 4.58% effective: 24.5bp Dec, 29bp Jan, 44bp Mar, 51bp May and 61bp Jun.
  • Today sees PPI and jobless claims in focus, with the former watched for its usual core PCE implications. That’s likely doubly so this month with a wide range of analyst estimates after CPI, and revisions from pre-CPI estimates moving in different directions (CIBC and Wrightson ICAP see core PCE at 0.3% M/M, Morgan Stanley 0.136% M/M).