April 26, 2024 18:22 GMT
Fed Rates Reverse Monthly PCE Decline, First Cut In Nov
STIR
- Fed Funds implied rates have increased back to almost exactly where they were ahead of today’s monthly PCE print.
- The initial decline on the monthly profile (half of strength back-loaded to Jan) started to be reversed by the outright strength of recent run rates, especially for supercore at 5.5% annualized over three months.
- It leaves a sizeable increase since yesterday’s quarterly GDP/PCE release after stronger than expected inflation in Q1 (despite Powell having already indicated 2.8% Y/Y in March vs the 2.7% that consensus was pointing to) - see table.
- Cumulative cuts from 5.33% effective: 1bp May, 3bp Jun, 9bp Jul, 19bp Sep, 24.5bp Nov and 34bp Dec.
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