Indicative Fed Pricing Holding Comfortably Off PPI-Extremes

Indicative Fed pricing continues to operate off of Friday's extremes.

• Friday's PPI print triggered a knee-jerk move which resulted in the pricing of the shallowest '24 cutting cycle seen YtD (~78bp through Dec '24 FOMC at one stage).
• Current June FOMC pricing shows over 90% odds of a 25bp cut through that juncture.
• Still markets did not want to threaten pricing of 3x 25bp cuts and that move retraced.
• More will be needed for a breach of that particular watermark.
• ~87.5bp of '24 cuts are priced at present, equivalent to 3.5x 25bp cuts.
• A reminder that FOMC pricing briefly showed over 170bp of '24 cuts in January.
• Friday's Fedspeak saw familiar tones from Fed's Daly, as she stressed that patience is needed re: the fight against inflation.
• Elsewhere, Friday saw former St. Louis Fed President Bullard note that the Fed should cut rates in March.
• He believes such a step would be a preemptive move that would mean that the policy stance does not unnecessarily restrain the economy later in '24.
• After last week's very busy schedule, this one is less packed with no major data until Thursday's jobless claims and flash PMIs.
• Fed communications will be the key focus, including the minutes of the January meeting due Wednesday (MNI's usual short preview will be out Tuesday).
• We hear from several FOMC participants the day after the minutes cross, including Jefferson, Bowman, Harker, Cook, Kashkari & Waller.