January 28, 2025 20:17 GMT
FED: Some Analysts Eye Value In Positioning For March Cut (2/2)
FED
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Few analysts that we have seen expect a cut in March, though some eye dovish potential in positioning for one - vs current pricing of around 25-30% of such a move.
- Morgan Stanley's January FOMC preview for example highlights that they see 25bp cuts in March and June.
- "Our economists think Powell keeps a March rate cut on the table, we think risk premiums embedded in market prices should skew to more cuts than projected in the dot plot. We continue to suggest positioning for a March FOMC rate cut...Maintain receive March FOMC meeting OIS at 4.28. Maintain long April fed funds futures contract (FFJ5) at 95.735." (Note those levels are little changed from publication on January 23).
- In addition to MS, ABNAmro, Commerzbank, Danske, Nomura, and UBS forecast cuts in March.
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Post-Dec FOMC (Dec 18) | Chg Since Then (bp) |
| Jan 29 2025 | 4.33 | -0.3 | -0.3 | 4.31 | 1.9 |
| Mar 19 2025 | 4.25 | -7.9 | -7.6 | 4.22 | 2.7 |
| May 07 2025 | 4.18 | -15.5 | -7.6 | 4.18 | -0.7 |
| Jun 18 2025 | 4.06 | -26.6 | -11.1 | 4.12 | -5.4 |
| Jul 30 2025 | 4.01 | -32.2 | -5.6 | 4.10 | -9.2 |
| Sep 17 2025 | 3.93 | -40.1 | -7.9 | 4.06 | -13.0 |
| Oct 29 2025 | 3.89 | -44.5 | -4.4 | 4.04 | -15.2 |
| Dec 10 2025 | 3.84 | -49.2 | -4.7 | 4.01 | -16.9 |
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