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STIR: Back Close To 100bp Of Fed Cuts To Year-End

STIR
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  • Fed Funds implied rates have lifted a little further above pre-FOMC minutes levels, with 1.5-3bp increases on the day with help from services-led surprise strength in Eurozone PMIs. 
  • Cumulative cuts from 5.33% effective: 33bp Sep, 68bp Nov, 101bp Dec, 128bp Jan and 189bp Jun. 
  • It's rate path close to where it was before yesterday’s preliminary payrolls benchmark revisions, with the 101bp of cuts to year-end vs 106bp shortly after the minutes. 
  • The FOMC minutes showed “several” members had already deemed it “plausible” to cut in July and a “vast majority” were ready to cut at the September meeting.  In keeping with the change of focus in the statement toward employment risks, the July Minutes suggest that cautionary voices on cuts were outnumbered by those who highlighted risks of cutting too little, too late.
  • Today sees jobless claims, flash PMIs and less so existing home sales in the driving seat although Boston Fed’s Collins (’25 voter) also speaks on Fox Business at ~0830ET. 
  • She said Aug 9 (post-payrolls, pre-CPI) that it will be appropriate to begin easing “soon” if data come in as expected with the timing and pace of cuts to be based on data. The labor market remains strong even though the latest jobs data came in softer than predicted. 
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  • Fed Funds implied rates have lifted a little further above pre-FOMC minutes levels, with 1.5-3bp increases on the day with help from services-led surprise strength in Eurozone PMIs. 
  • Cumulative cuts from 5.33% effective: 33bp Sep, 68bp Nov, 101bp Dec, 128bp Jan and 189bp Jun. 
  • It's rate path close to where it was before yesterday’s preliminary payrolls benchmark revisions, with the 101bp of cuts to year-end vs 106bp shortly after the minutes. 
  • The FOMC minutes showed “several” members had already deemed it “plausible” to cut in July and a “vast majority” were ready to cut at the September meeting.  In keeping with the change of focus in the statement toward employment risks, the July Minutes suggest that cautionary voices on cuts were outnumbered by those who highlighted risks of cutting too little, too late.
  • Today sees jobless claims, flash PMIs and less so existing home sales in the driving seat although Boston Fed’s Collins (’25 voter) also speaks on Fox Business at ~0830ET. 
  • She said Aug 9 (post-payrolls, pre-CPI) that it will be appropriate to begin easing “soon” if data come in as expected with the timing and pace of cuts to be based on data. The labor market remains strong even though the latest jobs data came in softer than predicted.