### POV, FED CUT CHANCES - A 25bp cut end of...>

FED: ### POV, FED CUT CHANCES 

- A 25bp cut end of July is still 100% priced in while a 50bp cut that had risen

to over 25% from 0.0% after the Fed chair's testimony last week, has declined

back to 18% (according to MNI's PINCH model) today. For the balance of 2019,

MNI's PINCH model shows chances of a second 25bp cut at the Sep FOMC at 100%,

while Dec chances of third 25bp cut are at 69.9% vs. 45.0% a month ago.

- Dealer opinions that haven't changed: Morgan Stanley and UBS are sticking with

their 50bp cut call at the end of the month vs. the consensus of 25bp by the

majority of dealer analysts/economists. Expect some fine tuning ahead of Fed

entering blackout period Saturday if Tue's Retail Sales comes out strong. 

- That said, Brian Coulton, Fitch Rating's Managing Director and Chief

Economist, posits markets are overestimating chances of rate cuts for 2019,

citing "robust jobs growth". Coulton said "a 25bp cut now appears probable at

either the July or September FOMC meeting but is unlikely to signal the start of

a series of interest rate cuts, in contrast to the path currently priced into

Fed funds futures markets."