STIR
- Fed Funds implied rates have pared around half of their earlier decline after a Russia missile attack on Ukraine with potentially the first use of an ICBM.
- Cumulative cuts from 4.58% effective: 14bp Dec, 21bp Jan, 35bp Mar and 55bp June.
- The FT earlier published comments from Richmond Fed’s Barkin (’24 voter) which somewhat echoed an increasing collection of Fed officials hinting at a decision between cutting another 25bp in Dec or pausing.
- Separately, in comments to Barron’s, NY Fed’s Williams (voter) said PCE inflation is “not quite there yet” with respect to the inflation target but he sees inflation cooling further. “Will be appropriate over time to bring the Fed funds rate down closer to more normal or neutral levels”. He sees "normal" probability of a US recession and expects the unemployment rate to sit between 4-4.25%.
- For today’s Fedspeak, we pick Cleveland Fed’s Hammack (’24) to watch as she hasn’t spoken since the US election/FOMC, although the style of remarks could limit her own mon pol views.
- Note that KC Fed’s Schmid (’25) is set to speak on longer-term policy at 1240ET but the title is identical to last week’s speech which noted "While now is the time to begin dialing back the restrictiveness of monetary policy, it remains to be seen how much further interest rates will decline or where they might eventually settle." We nevertheless watch to see whether he gives a clue that his neutral rate estimate is closer to 4% than 3%.
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