August 13, 2024 13:18 GMT
Modest Dovish Reaction To PPI Miss For Nearer-Term Fed Meetings
STIR
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- Declines in nearer-term Fed Funds implied rates after the PPI release have been relatively restrained.
- Particularly weak trade services at -1.3% M/M (reliant on imputed prices, and following June's 1.4% jump) have taken some of the sting out of miss and with the narrowest measure of core PPI stronger than expected.
- Nevertheless, a marginal softening of PCE-relevant components and their net downward revisions helps maintain a dovish reaction ahead of CPI tomorrow.
- Cumulative cuts: 40.5bp Sep (+1bp), 73bp Nov, 105bp Dec (+2bp), 129bp Jan, building out to 188bp June (+4bp).
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