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STIR: Consolidating Post-CPI Moves But Still 105bp Of Cuts To Year-End

STIR
Bullet
  • Fed Funds implied rates hold or have modestly extended yesterday’s increase on the CPI report with its strong rental inflation components.
  • Cumulative cuts from 5.33% effective: 28.5bp Sep, 65bp Nov, 105bp Dec, 141bp Jan and 219bp June.
  • It sees a 25bp cut next week as increasingly locked in (28bp priced by 32bp pre-CPI and 37bp pre-Waller) but there is still a path of heavy rate cuts further out.
  • Incremental cut pricing of 37/39/37bp cuts for Nov/Dec/Jan meetings compare with 40/41/39bp pre-CPI.
  • Today’s 0830ET data are the main risk events, with PPI watched for the usual PCE implications and likely continued sensitivity to weekly jobless claims. 
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  • Fed Funds implied rates hold or have modestly extended yesterday’s increase on the CPI report with its strong rental inflation components.
  • Cumulative cuts from 5.33% effective: 28.5bp Sep, 65bp Nov, 105bp Dec, 141bp Jan and 219bp June.
  • It sees a 25bp cut next week as increasingly locked in (28bp priced by 32bp pre-CPI and 37bp pre-Waller) but there is still a path of heavy rate cuts further out.
  • Incremental cut pricing of 37/39/37bp cuts for Nov/Dec/Jan meetings compare with 40/41/39bp pre-CPI.
  • Today’s 0830ET data are the main risk events, with PPI watched for the usual PCE implications and likely continued sensitivity to weekly jobless claims.