Dovish Moves In Fed Pricing On Retail Sales, A Little Over 45bp Of '24 Cuts Priced

Dovish moves in U.S. STIRs in the wake of the softer-than-expected retail sales readings and negative revisions.

• FOMC-dated OIS price ~46bp of cuts through year end vs. ~41bp ahead of the data. June’s dovish extremes of ~49bp are not threatened.
• Further forwards, a 25bp cut is once again fully discounted through the Nov FOMC (~28bp of cuts priced vs. ~24bp ahead of the data).
• Meanwhile, the September FOMC sees ~18bp of cuts priced vs. ~15.5bp ahead of the data.
• While this data isn’t as market moving as the Fed mandate-specific inflation and employment readings, the relative strength of the U.S. consumer (vs. wider expectations) has played into the higher-for-longer policy rate outcome seen in ‘24.
• Accompanying Fedspeak from Williams highlights data dependence while underscoring the Fed’s central economic projections. This shouldn’t be market moving.