Free Trial

Modest Dovish Move In Fed Pricing On PCE

STIR

The PCE data initially generates a dovish reaction in FOMC-dated OIS, although that move and the initial rally in Tsys fade from extremes.

  • The March PCE deflator numbers undershot some expectations stemming from yesterday’s Q1 core PCE release, despite printing in line to a touch above the BBG survey medians.
  • Meanwhile, it became apparent that most of the firmer-than-expected Q1 core PCE data could be explained by upwards revisions to the January readings, which provided a slightly dovish tinge for markets as they digested the data.
  • Still, the monthly PCE readings do little to alter the post-Q1 PCE narrative, leaving the recent acceleration in inflation run rates at the fore and market-implied Fed policy rates at the more hawkish end of the recently observed ranges.
  • FOMC-dated OIS moves to price ~37bp of cuts through year end vs. ~34bp pre-data, with November FOMC pricing once again fully discounting a 25bp cut.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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.