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STIR: Close to 50/50 Odds Of 50bp Nov Cut Pre-Powell

STIR
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  • Fed Funds implied rates have cooled off highs ahead but hold a sizeable increase seen after German regional CPI prints belied softer French and Spanish readings from last week plus some potential quarter-end rebalancing.
  • Cumulative cuts: 36.5bp Nov, 74bp Dec, 106bp Jan and 172bp June.
  • Fed Chair Powell speaks ahead at 1355ET, with a luncheon address at the NABE conference in Nashville (text + Q&A). Impact could be limited by the fact there has been relatively little by way of tier one data releases since his FOMC press conference (Friday’s core PCE appeared to be in line with Gov Waller’s estimates).
  • We approach it with the Nov implied rate more 10bp lower than prior to the Sep 18 FOMC announcement but only 1.5bp lower than prior to Powell taking the podium. That should limit impact from similar rhetoric that a 50bp cut earlier this month doesn't set the tone for the cadence of rate cuts ahead, something that other FOMC members have pushed including Bostic most recently. 
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  • Fed Funds implied rates have cooled off highs ahead but hold a sizeable increase seen after German regional CPI prints belied softer French and Spanish readings from last week plus some potential quarter-end rebalancing.
  • Cumulative cuts: 36.5bp Nov, 74bp Dec, 106bp Jan and 172bp June.
  • Fed Chair Powell speaks ahead at 1355ET, with a luncheon address at the NABE conference in Nashville (text + Q&A). Impact could be limited by the fact there has been relatively little by way of tier one data releases since his FOMC press conference (Friday’s core PCE appeared to be in line with Gov Waller’s estimates).
  • We approach it with the Nov implied rate more 10bp lower than prior to the Sep 18 FOMC announcement but only 1.5bp lower than prior to Powell taking the podium. That should limit impact from similar rhetoric that a 50bp cut earlier this month doesn't set the tone for the cadence of rate cuts ahead, something that other FOMC members have pushed including Bostic most recently.