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STIR: Next Fed Cut Seen In Sept With CPI and Powell Response Eyed

STIR
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  • Fed Funds implied rates hold yesterday’s push higher (seen prior to Powell’s Senate appearance with his comments then consolidating the move) ahead of today’s US CPI report and Powell’s turn in the House.
  • Cumulative cuts from 4.33% effective: 1bp Mar, 6.5bp May, 14bp Jun, 19bp Jul, 26bp Sep and 36bp Dec.
  • CPI headlines today’s macro docket whilst the second day of Powell’s congressional testimony at 1000ET will be watched for any reaction to the data in the Q&A. He characterized the labor market as “very strong” vs “solid” in recent months, and noted the neutral rate has risen meaningfully since before the pandemic.
  • MNI US CPI Preview: https://media.marketnews.com/USCPI_Prev_Feb2025_e3ccd233d6.pdf
  • Today’s other Fedspeak sees only Bostic as set to talk on mon pol matters. We watch for any further hawkish shift with Hammack and Logan recently very subtly speculating about a possible rate hike as the Fed’s next move (more on that here).
    • 1200ET – Bostic (non-voter) on economic outlook (Q&A only). He said earlier this month that he wants to see the impact of past cuts and may wait “for a while” and doesn’t think there will be inflation clarity by the Fed’s next meeting. He sees nominal neutral at 3-3.5%
    • 1705ET – Waller (permanent voter) on stablecoins (text + Q&A)
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  • Fed Funds implied rates hold yesterday’s push higher (seen prior to Powell’s Senate appearance with his comments then consolidating the move) ahead of today’s US CPI report and Powell’s turn in the House.
  • Cumulative cuts from 4.33% effective: 1bp Mar, 6.5bp May, 14bp Jun, 19bp Jul, 26bp Sep and 36bp Dec.
  • CPI headlines today’s macro docket whilst the second day of Powell’s congressional testimony at 1000ET will be watched for any reaction to the data in the Q&A. He characterized the labor market as “very strong” vs “solid” in recent months, and noted the neutral rate has risen meaningfully since before the pandemic.
  • MNI US CPI Preview: https://media.marketnews.com/USCPI_Prev_Feb2025_e3ccd233d6.pdf
  • Today’s other Fedspeak sees only Bostic as set to talk on mon pol matters. We watch for any further hawkish shift with Hammack and Logan recently very subtly speculating about a possible rate hike as the Fed’s next move (more on that here).
    • 1200ET – Bostic (non-voter) on economic outlook (Q&A only). He said earlier this month that he wants to see the impact of past cuts and may wait “for a while” and doesn’t think there will be inflation clarity by the Fed’s next meeting. He sees nominal neutral at 3-3.5%
    • 1705ET – Waller (permanent voter) on stablecoins (text + Q&A)
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