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STIR: Next Fed Cut Fully Priced For July, ISM Services In Focus

STIR
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  • Fed Funds implied rates have extended yesterday’s decline along with broader FI rallies. Expect continued sensitivity to Trump headlines but today’s scheduled macro focus is on ISM Services at 1000ET (after its priced paid series jumped 5.9pts to 64.4 in December for the highest since Feb 2023) plus any spillover from Treasury’s QRA at 0830ET.  
  • We also have three Fedspeakers scheduled today but only Barkin last spoke prior to Trump’s inauguration. Recent context below.
  • Cumulative cuts from 4.33% effective: 4.5bp Mar, 11.5bp May, 22bp Jun, 28bp Jul and 47bp Dec.  
  • Vice Chair Jefferson (permanent voter) spoke late yesterday for the first time since early October. He appeared broadly in line with the median member: “I continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome.That said, I do not think we need to be in a hurry to change our stance.”
  • 0730ET – Barkin (non-voter) on Bloomberg TV (no text). He last spoke Jan 15, saying latest CPI data suggest inflation is still declining but the Fed should remain restrictive until inflation returns to 2%. He was encouraged by the drop in the US unemployment rate in December. It’s currently difficult to build Trump policies into forecasts.
  • 0900ET – Barkin in fireside chat at Conference Board “2025: A Year In Preview” (no text)
  • 1430ET – Goolsbee (’25 voter, text only) at automotive conference (text only). He has already spoken this week, saying the Fed has to be more careful with how fast to cut rates – of note for the most dovish member of the committee.
  • 1500ET – Bowman (permanent voter) gives update on economy & bank regulation (text only). One of the most hawkish members of the FOMC, she said Jan 31 that she wants to see inflation progress before adjusting rates and that it’s unlikely rates are exerting “meaningful restraint”. 
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  • Fed Funds implied rates have extended yesterday’s decline along with broader FI rallies. Expect continued sensitivity to Trump headlines but today’s scheduled macro focus is on ISM Services at 1000ET (after its priced paid series jumped 5.9pts to 64.4 in December for the highest since Feb 2023) plus any spillover from Treasury’s QRA at 0830ET.  
  • We also have three Fedspeakers scheduled today but only Barkin last spoke prior to Trump’s inauguration. Recent context below.
  • Cumulative cuts from 4.33% effective: 4.5bp Mar, 11.5bp May, 22bp Jun, 28bp Jul and 47bp Dec.  
  • Vice Chair Jefferson (permanent voter) spoke late yesterday for the first time since early October. He appeared broadly in line with the median member: “I continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome.That said, I do not think we need to be in a hurry to change our stance.”
  • 0730ET – Barkin (non-voter) on Bloomberg TV (no text). He last spoke Jan 15, saying latest CPI data suggest inflation is still declining but the Fed should remain restrictive until inflation returns to 2%. He was encouraged by the drop in the US unemployment rate in December. It’s currently difficult to build Trump policies into forecasts.
  • 0900ET – Barkin in fireside chat at Conference Board “2025: A Year In Preview” (no text)
  • 1430ET – Goolsbee (’25 voter, text only) at automotive conference (text only). He has already spoken this week, saying the Fed has to be more careful with how fast to cut rates – of note for the most dovish member of the committee.
  • 1500ET – Bowman (permanent voter) gives update on economy & bank regulation (text only). One of the most hawkish members of the FOMC, she said Jan 31 that she wants to see inflation progress before adjusting rates and that it’s unlikely rates are exerting “meaningful restraint”. 
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