January 21, 2025 21:24 GMT
STIR: Fed Hold Firmly Priced For Next Week, 2025 Cut Pricing Settles Around 40bp
STIR
A week out from the first day of the FOMC's 2-day January meeting, Fed rate pricing was almost unchanged Tuesday vs Friday (the last full session before Monday's market close).
- Fed funds futures continue to see the next 25bp cut in July, with 39bp of cuts through the whole of 2025 (1bp more than seen at Friday's close).
- That said, 2025 cut pricing was as high as 43bp overnight -equalling last week's post CPI levels - alongside a rally in the rest of the fixed income complex, on Trump tariff headlines.
- But the move faded in early trade, with Dec25 implied Fed Funds settling at 3.94% (39bp of cuts from 4.33% effective Fed funds spot).
- With no FOMC speakers ahead of next week's meeting (a hold is almost 100% priced), and market-moving data limited until Thursday's jobless claims, attention for potential market movers will be first and foremost on Trump administration policy announcements.
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Prior Session (Jan 17) | Chg Since Then (bp) |
| Jan 29 2025 | 4.33 | -0.3 | -0.3 | 4.33 | -0.1 |
| Mar 19 2025 | 4.26 | -6.7 | -6.4 | 4.25 | 0.9 |
| May 07 2025 | 4.20 | -12.6 | -5.9 | 4.20 | 0.5 |
| Jun 18 2025 | 4.11 | -21.9 | -9.3 | 4.11 | 0.0 |
| Jul 30 2025 | 4.07 | -26.2 | -4.3 | 4.07 | -0.5 |
| Sep 17 2025 | 4.01 | -32.0 | -5.8 | 4.02 | -0.5 |
| Oct 29 2025 | 3.98 | -35.3 | -3.3 | 3.98 | -0.6 |
| Dec 10 2025 | 3.94 | -38.9 | -3.6 | 3.95 | -1.0 |
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