Free Trial

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.
105 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • 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.