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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.
STIR
- Fed Funds implied rates have tumbled overnight in a second wind as regional equities in particular reacted to Friday’s far softer than expected payrolls report.
- Prospects of an inter-meeting rate cut have received particular attention overnight, with the August Fed Funds contract showing 7.3bp of cuts from a 5.33% effective rate (it was 3bp at Friday’s close and 1.5bp prior to payrolls). It touched as much as 12bp overnight.
- There is a risk here that regular Board of Governors meetings are seen as a potential sign of an upcoming emergency cut.
- Contracts for meetings across September-January have all added around 15bp of additional cuts since Friday’s close.
- Cumulative cuts from 5.33% effective: 61.5bp Sep, 102bp Nov, 133bp Dec and 157bp Jan.
- (WIRP is running from an implied overnight rate of 5.26% with 56bp of cuts for September).
- There is limited Fedspeak scheduled today, primarily Chicago Fed’s Goolsbee (’25 voter) on CNBC at 0830ET before Daly (’24 voter) in a moderated discussion late on at 1700ET. Goolsbee has already spoken since payrolls, cautioning on overreacting to a single month’s data but acknowledging that the jobs data follows a trend of a cooling labor market and seeing a need to balance policy with economy in “short order”.
- Note that Barkin (’24 voter) appeared over the weekend saying there is a debate about much of the jobs weakness was due to weather (despite the BLS saying Beryl had “no discernible effect”) and that the Fed will get a lot of data between now and September.
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.
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