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STIR: Next Fed Cut Seen In Sept With Minutes & Jefferson To Come

STIR
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  • Fed Funds implied rates are little changed on the day for meetings out to June but as much as 2bp lower by end-2025.
  • The decline came 30mins either side of the cash equity open with no clear drivers from what were mixed data. From a potential disinflationary, Putin quoted Trump as saying Ukraine will take part in peace talks.
  • Cumulative cuts from 4.33% effective: 0.5bp Mar, 4bp May, 12.5bp Jun, 18bp Jul, 27bp Sep and 37bp Dec.
  • Ahead, the FOMC minutes at 1400ET will be scrutinized for: why the Fed shifted its statement language on inflation; was there any discussion of a rate hike scenario; and was there any further discussion over the potential impact of government policy shifts?
  • MNI FOMC Minutes Preview.
  • Fed VC Jefferson also talks on the household balance sheet at 1700ET with both text and Q&A. He last spoke Feb 4, noting the need for caution as per many FOMC members: “As long as the economy and labor market remain strong, I see it as appropriate for the Committee to be cautious in making further adjustments… Over the medium term, 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.”
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  • Fed Funds implied rates are little changed on the day for meetings out to June but as much as 2bp lower by end-2025.
  • The decline came 30mins either side of the cash equity open with no clear drivers from what were mixed data. From a potential disinflationary, Putin quoted Trump as saying Ukraine will take part in peace talks.
  • Cumulative cuts from 4.33% effective: 0.5bp Mar, 4bp May, 12.5bp Jun, 18bp Jul, 27bp Sep and 37bp Dec.
  • Ahead, the FOMC minutes at 1400ET will be scrutinized for: why the Fed shifted its statement language on inflation; was there any discussion of a rate hike scenario; and was there any further discussion over the potential impact of government policy shifts?
  • MNI FOMC Minutes Preview.
  • Fed VC Jefferson also talks on the household balance sheet at 1700ET with both text and Q&A. He last spoke Feb 4, noting the need for caution as per many FOMC members: “As long as the economy and labor market remain strong, I see it as appropriate for the Committee to be cautious in making further adjustments… Over the medium term, 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.”
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