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STIR: 50bp Sep Fed Cut Odds Climb On Dovish Press Articles & Ex Fed Comments

STIR
BulletMarketsFixed Income Bullets
  • Fed Funds show much greater odds of a 50bp cut from the FOMC next week after yesterday’s articles from the WSJ (including ex-Powell adviser Jon Faust saying it’s a “close call”) and the FT, with initial reaction extending overnight.
  • Former NY Fed President Dudley also sees a strong case for a 50bp cut, although that should be less of a surprise, as he previously pointed to the potential for such a move.
  • Cumulative cuts from 5.33% effective: 36bp Sep (28bp pre-WSJ), 75bp Nov, 116bp Dec (103bp pre-WSJ), 153bp Jan and 230bp June (215bp pre-WSJ).
  • OIS prices 33bp of cuts for next week.
  • Implied rates for the next two meetings are now only slightly higher than what was seen ahead of Governor Waller’s failure to express an explicit preference for a 50bp move post-payrolls.
  • Meanwhile, end-2024 rates have more than reversed the lift from a rental inflation-led core CPI beat.
  • We highlighted some key differences between the latest WSJ article and the 2022 steer. A reminder that the latter instance signalled an upsizing of rate hikes during a Fed blackout period.
  • See: "50bp Cut Blackout Talk Contrasts With 2022 Episode (1/2)" at 1518ET, and "Direction Of Rate Travel Very Different Now To 2022 (2/2)" at 1521ET

 

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  • Fed Funds show much greater odds of a 50bp cut from the FOMC next week after yesterday’s articles from the WSJ (including ex-Powell adviser Jon Faust saying it’s a “close call”) and the FT, with initial reaction extending overnight.
  • Former NY Fed President Dudley also sees a strong case for a 50bp cut, although that should be less of a surprise, as he previously pointed to the potential for such a move.
  • Cumulative cuts from 5.33% effective: 36bp Sep (28bp pre-WSJ), 75bp Nov, 116bp Dec (103bp pre-WSJ), 153bp Jan and 230bp June (215bp pre-WSJ).
  • OIS prices 33bp of cuts for next week.
  • Implied rates for the next two meetings are now only slightly higher than what was seen ahead of Governor Waller’s failure to express an explicit preference for a 50bp move post-payrolls.
  • Meanwhile, end-2024 rates have more than reversed the lift from a rental inflation-led core CPI beat.
  • We highlighted some key differences between the latest WSJ article and the 2022 steer. A reminder that the latter instance signalled an upsizing of rate hikes during a Fed blackout period.
  • See: "50bp Cut Blackout Talk Contrasts With 2022 Episode (1/2)" at 1518ET, and "Direction Of Rate Travel Very Different Now To 2022 (2/2)" at 1521ET