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STIR: Fed Rate Path Modestly Lower Post Minutes, Musalem Leads Speak

STIR
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  • Fed Funds implied rates are 0-1.5bp lower on the day, after little initial reaction to yesterday’s FOMC minutes which matched the tone from Powell’s press conference re not being in a hurry to cut rates again.
  • Maybe most notable for monetary policy, the "vast majority" saw policy as "still-restrictive", despite it being "significantly less restrictive" after the previous 100bp of cuts. Treasuries were supported more significantly on ending QT considerations though, which could be feeding back into the broader FI rally.  
  • Cumulative cuts from 4.33% effective: 0.5bp Mar, 4bp May, 13.5bp Jun, 20bp Jul, 28bp Sep and 39bp Dec.
  • Jobless claims headline today’s data whilst Fedspeak comes from four FOMC members who vote this year. From a mon pol angle, we put greatest focus on St Louis Fed’s Musalem, one of the most hawkish members on the committee.
    • 0935 - Goolsbee (’25 voter, dove) in moderated Q&A. He has spoken various times recently, noting post-CPI that the latest reading was “sobering” but he still saw rates settling a “fair bit below” today’s levels. He then added yesterday that once inflation comes down, rates can come down more.
    • 1205 - Musalem (’25 voter, hawk) speaks to Economic Club of NY (text + Q&A).  He last spoke Jan 10, saying more caution is needed for further cuts whilst noting a need to be both “patient and careful”. That was prior to the end-Jan FOMC meeting and subsequent strength seen in payrolls and CPI, although the latter’s seasonality concerns have been mentioned by multiple FOMC members since then.  
    • 1430 - Outgoing VC Supervision Barr (perm. voter) on supervision and regulation (text + Q&A)
    • 1700 - Kugler (perm. voter, center) on inflation and the Phillips Curve (text + Q&A). Kugler spoke on Feb 7, i.e. post payrolls and pre-CPI/PPI, arguing to keep rates on hold for “some time”. 
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  • Fed Funds implied rates are 0-1.5bp lower on the day, after little initial reaction to yesterday’s FOMC minutes which matched the tone from Powell’s press conference re not being in a hurry to cut rates again.
  • Maybe most notable for monetary policy, the "vast majority" saw policy as "still-restrictive", despite it being "significantly less restrictive" after the previous 100bp of cuts. Treasuries were supported more significantly on ending QT considerations though, which could be feeding back into the broader FI rally.  
  • Cumulative cuts from 4.33% effective: 0.5bp Mar, 4bp May, 13.5bp Jun, 20bp Jul, 28bp Sep and 39bp Dec.
  • Jobless claims headline today’s data whilst Fedspeak comes from four FOMC members who vote this year. From a mon pol angle, we put greatest focus on St Louis Fed’s Musalem, one of the most hawkish members on the committee.
    • 0935 - Goolsbee (’25 voter, dove) in moderated Q&A. He has spoken various times recently, noting post-CPI that the latest reading was “sobering” but he still saw rates settling a “fair bit below” today’s levels. He then added yesterday that once inflation comes down, rates can come down more.
    • 1205 - Musalem (’25 voter, hawk) speaks to Economic Club of NY (text + Q&A).  He last spoke Jan 10, saying more caution is needed for further cuts whilst noting a need to be both “patient and careful”. That was prior to the end-Jan FOMC meeting and subsequent strength seen in payrolls and CPI, although the latter’s seasonality concerns have been mentioned by multiple FOMC members since then.  
    • 1430 - Outgoing VC Supervision Barr (perm. voter) on supervision and regulation (text + Q&A)
    • 1700 - Kugler (perm. voter, center) on inflation and the Phillips Curve (text + Q&A). Kugler spoke on Feb 7, i.e. post payrolls and pre-CPI/PPI, arguing to keep rates on hold for “some time”. 
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