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STIR: FOMC Minutes Ahead – 1400ET

STIR
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  • Fed Funds implied rates hold the day’s push higher with a rate path shifting back closer to Friday’s cycle highs ahead of FOMC minutes.
  • Cumulative cuts from 4.58% effective: 14bp Dec, 19bp Jan, 32bp Mar and 49bp June.  
  • Looking further out to Dec’25, the implied 71bp of cuts to an effective 3.88% is still elevated compared to prior FOMC forecasts from September at least, with only one dot higher for 2024. There was 1 at 4-4.25% and 1 at 3.75-4% (with the latter equivalent to an effective 3.83% at current spreads above the lower target range), whilst all others were at 3.5-3.75% and below.
  • The minutes will be viewed in light of the hawkish tilt in Fed officials’ commentary since the Nov 7 decision. There have been two major shifts in FOMC tone: one is that the very word "pause" was introduced as a possibility by senior FOMC members and erstwhile dove (Cook, Kugler); the other is that there is growing concern over the implications of longer-end rates.
  • Neutral rate-talk has also dominated in a hawkish direction. We get the sense that November’s FOMC discussion included some estimates of the neutral rate (note the stir created by Dallas’ Logan over perhaps already having reached neutral), as well as starting to talk about the circumstances for slowing/ending the rate cut cycle.
  • See the full MNI FOMC Minutes Preview here. 
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  • Fed Funds implied rates hold the day’s push higher with a rate path shifting back closer to Friday’s cycle highs ahead of FOMC minutes.
  • Cumulative cuts from 4.58% effective: 14bp Dec, 19bp Jan, 32bp Mar and 49bp June.  
  • Looking further out to Dec’25, the implied 71bp of cuts to an effective 3.88% is still elevated compared to prior FOMC forecasts from September at least, with only one dot higher for 2024. There was 1 at 4-4.25% and 1 at 3.75-4% (with the latter equivalent to an effective 3.83% at current spreads above the lower target range), whilst all others were at 3.5-3.75% and below.
  • The minutes will be viewed in light of the hawkish tilt in Fed officials’ commentary since the Nov 7 decision. There have been two major shifts in FOMC tone: one is that the very word "pause" was introduced as a possibility by senior FOMC members and erstwhile dove (Cook, Kugler); the other is that there is growing concern over the implications of longer-end rates.
  • Neutral rate-talk has also dominated in a hawkish direction. We get the sense that November’s FOMC discussion included some estimates of the neutral rate (note the stir created by Dallas’ Logan over perhaps already having reached neutral), as well as starting to talk about the circumstances for slowing/ending the rate cut cycle.
  • See the full MNI FOMC Minutes Preview here.