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STIR: Fed Rates Steady, Bowman Might Struggle To Out-Hawk Herself

STIR
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  • Fed Funds implied rates for meetings out to mid-2025 have seen relatively little impetus from the China stimulus overnight that has helped underpin steepening moves in core FI.
  • The November implied rate is unchanged, still hovering close to an implied 40bps of cuts, whilst subsequent meetings out to Jun’25 are only 1-1.5bp higher.
  • Cumulative cuts from 4.83% effective: 39bp Nov, 75bp Dec, 109bp Jan and 176bp June.
  • Today’s sole schedule Fedspeak comes from Gov Bowman (voter) at 0900ET (text + Q&A), the most hawkish member on the FOMC having dissented against last week’s 50bp cut.
  • There’s little scope for surprises here as she explained why she dissented on Friday (remarks here), noting that she’d have preferred to cut by 25bps for a measured return to a more neutral policy stance having not yet achieved the inflation goal.
  • She was very likely one of the two FOMC members who pencilled in the Fed Funds target range of 4.75-5.0% (i.e. where it now is) for end-2024. One member then saw rates only 75bp lower from current levels by end-2025 and one saw 100bps lower. 
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  • Fed Funds implied rates for meetings out to mid-2025 have seen relatively little impetus from the China stimulus overnight that has helped underpin steepening moves in core FI.
  • The November implied rate is unchanged, still hovering close to an implied 40bps of cuts, whilst subsequent meetings out to Jun’25 are only 1-1.5bp higher.
  • Cumulative cuts from 4.83% effective: 39bp Nov, 75bp Dec, 109bp Jan and 176bp June.
  • Today’s sole schedule Fedspeak comes from Gov Bowman (voter) at 0900ET (text + Q&A), the most hawkish member on the FOMC having dissented against last week’s 50bp cut.
  • There’s little scope for surprises here as she explained why she dissented on Friday (remarks here), noting that she’d have preferred to cut by 25bps for a measured return to a more neutral policy stance having not yet achieved the inflation goal.
  • She was very likely one of the two FOMC members who pencilled in the Fed Funds target range of 4.75-5.0% (i.e. where it now is) for end-2024. One member then saw rates only 75bp lower from current levels by end-2025 and one saw 100bps lower.