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STIR: Powell Reiterating No Hurry To cut Continues To Weigh

STIR
USGlobalCentral Bank NewsFederal ReserveBulletMarketsFixed Income BulletsForeign Exchange BulletsRegionNorth America
  • Fed Funds implied rates have been reluctant to pare yesterday’s two-step increase from initially spillover to German regional CPI before Fed Chair Powell’s comments to NABE.
  • Cumulative cuts from 4.83% effective: 36bp Nov, 72bp Dec, 102bp Jan and 165bp June.
  • Whilst the rhetoric from Powell’s comments were similar to the FOMC press conference when he cautioned against assuming the same cadence of rate cuts ahead after 50bp on Sep 18, the explicitness of "this is not a committee that feels like it's in a hurry to cut rates quickly” continues to weigh.
  • The market still sees large odds of a 50bp cut in Nov with sensitivity to any further labor market softening. The Fed sees the unemployment rate ending the year at 4.4% but with then no further increases as of end-2025, dialling up sensitivity to any rise in Friday’s NFP report from the 4.22% as of August.
  • Powell talking on the potential steadiness of a rate cutting cycle and last week’s strong data (which as we noted ruled out a downside risk as GDI was revised up strongly) have seen implied meeting rates from March onwards higher than before the Sept FOMC decision.  
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  • Fed Funds implied rates have been reluctant to pare yesterday’s two-step increase from initially spillover to German regional CPI before Fed Chair Powell’s comments to NABE.
  • Cumulative cuts from 4.83% effective: 36bp Nov, 72bp Dec, 102bp Jan and 165bp June.
  • Whilst the rhetoric from Powell’s comments were similar to the FOMC press conference when he cautioned against assuming the same cadence of rate cuts ahead after 50bp on Sep 18, the explicitness of "this is not a committee that feels like it's in a hurry to cut rates quickly” continues to weigh.
  • The market still sees large odds of a 50bp cut in Nov with sensitivity to any further labor market softening. The Fed sees the unemployment rate ending the year at 4.4% but with then no further increases as of end-2025, dialling up sensitivity to any rise in Friday’s NFP report from the 4.22% as of August.
  • Powell talking on the potential steadiness of a rate cutting cycle and last week’s strong data (which as we noted ruled out a downside risk as GDI was revised up strongly) have seen implied meeting rates from March onwards higher than before the Sept FOMC decision.