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STIR: Steady Rally In Fed Rates Back To Three Cuts For 2025

STIR
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  • Fed Funds implied rates have continued to decline in recent hours, following steady broader FI rallies.
  • It's helped by latest escalation of Trump tariff threats re 200% rates on EU alcohol plus oil futures under pressure on signs of progress towards a Russia-Ukraine ceasefire (WTI -1.7%).
  • It has easily more than reversed the modest push higher following PPI and jobless claims releases and also leaves implied rates at best back at yesterday’s pre-CPI levels (Mar and May contracts) and otherwise up to 2.5bp lower (Sep-Dec).
  • Recall that CPI details pointed to a firming in core PCE tracking to 0.31/0.32% M/M before today’s PPI details suggested confirmation or perhaps a marginal nudge higher.  
  • Cumulative cuts from 4.33% effective: 0.5bp Mar, 9bp May, 27bp Jun, 38bp Jul and 74bp Dec.
  • There had at one point been 67bp of cuts priced for 2025. 
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  • Fed Funds implied rates have continued to decline in recent hours, following steady broader FI rallies.
  • It's helped by latest escalation of Trump tariff threats re 200% rates on EU alcohol plus oil futures under pressure on signs of progress towards a Russia-Ukraine ceasefire (WTI -1.7%).
  • It has easily more than reversed the modest push higher following PPI and jobless claims releases and also leaves implied rates at best back at yesterday’s pre-CPI levels (Mar and May contracts) and otherwise up to 2.5bp lower (Sep-Dec).
  • Recall that CPI details pointed to a firming in core PCE tracking to 0.31/0.32% M/M before today’s PPI details suggested confirmation or perhaps a marginal nudge higher.  
  • Cumulative cuts from 4.33% effective: 0.5bp Mar, 9bp May, 27bp Jun, 38bp Jul and 74bp Dec.
  • There had at one point been 67bp of cuts priced for 2025. 
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