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STIR: Further Hawkish Post-Payrolls Adjustment

STIR
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  • Fed Funds implied rates have kicked higher again since Friday’s close in a combination of overseas reaction to the strong payrolls report plus sharp increase in oil futures.
  • Cumulative cuts from 4.83% effective: 23bp Nov, 50bp Dec, 70bp Jan and 116bp June.
  • The cumulative 50bp over the two meetings left this year is now consistent with the median FOMC dot from last month’s SEP.
  • Three analysts in the minority who had been looking for a second 50bp cut in Nov have switched to 25bp cut calls (BofA, CIBC and JPM), but odds of a November ‘skip’ are still deemed low -- the MNI Employment Insight will follow a little later.
  • There are multiple Fed speakers offering post-payrolls reaction today, tilted later in the session starting with Gov. Bowman at 1300ET (hawk, dissenter) before Kashkari (non-voter) at 1350ET, Bostic (’24) at 1800ET and then Musalem (’25) likely going into the most detail with a speech on the economy and policy at 1830ET. 
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  • Fed Funds implied rates have kicked higher again since Friday’s close in a combination of overseas reaction to the strong payrolls report plus sharp increase in oil futures.
  • Cumulative cuts from 4.83% effective: 23bp Nov, 50bp Dec, 70bp Jan and 116bp June.
  • The cumulative 50bp over the two meetings left this year is now consistent with the median FOMC dot from last month’s SEP.
  • Three analysts in the minority who had been looking for a second 50bp cut in Nov have switched to 25bp cut calls (BofA, CIBC and JPM), but odds of a November ‘skip’ are still deemed low -- the MNI Employment Insight will follow a little later.
  • There are multiple Fed speakers offering post-payrolls reaction today, tilted later in the session starting with Gov. Bowman at 1300ET (hawk, dissenter) before Kashkari (non-voter) at 1350ET, Bostic (’24) at 1800ET and then Musalem (’25) likely going into the most detail with a speech on the economy and policy at 1830ET.