November 22, 2024 19:56 GMT
STIR: Current End-2025 Implied Pricing Above All But 1 September FOMC Dot
STIR
This week has seen a further shift higher in the expected Fed funds path through 2025, with futures-implied effective rates seen remaining above 4% through to the September 2025 FOMC - 7 meetings from now. See below. A December cut is barely seen at higher probability than a coin flip. See table below.
- Since last Friday, futures markets have priced out cuts by a further 10bp through that period, leaving fully-implied cuts at just 2x 25bp through the July 2025 FOMC, and a cumulative 65bp of cuts from now through end-2025.
- To put this into perspective, the FOMC's September projections foresaw a median end-2025 rate of 3.375% - only 1 of 19 submissions saw rates above where markets are currently priced by end-2025 (1 at 4.125%; there was 1 at 3.875% and all others at 3.625% and below; vs 3.92% FF implied).
- Some analysts have begun forecasting even more cautious paths: this week saw Deutsche eliminate any 2025 Fed cuts from its baseline, and even the 25bp it expects in December is a close call.
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | End of Last Week (Nov 15) | Chg Since Then (bp) |
| Dec 18 2024 | 4.45 | -13.4 | -13.5 | 4.43 | 1.3 |
| Jan 29 2025 | 4.39 | -18.8 | -5.4 | 4.35 | 4.4 |
| Mar 19 2025 | 4.27 | -31.1 | -12.3 | 4.20 | 6.6 |
| May 07 2025 | 4.20 | -37.6 | -6.5 | 4.13 | 7.8 |
| Jun 18 2025 | 4.11 | -47.5 | -9.9 | 4.02 | 8.9 |
| Jul 30 2025 | 4.05 | -52.8 | -5.3 | 3.95 | 10.2 |
| Sep 17 2025 | 4.00 | -58.0 | -5.2 | 3.90 | 10.4 |
| Oct 29 2025 | 3.96 | -62.3 | -4.3 | 3.86 | 9.7 |
| Dec 10 2025 | 3.92 | -65.8 | -3.5 | 3.83 | 8.9 |
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