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UK CPI Beat Helps Near-Term Fed Rates Hit Joint Highs

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  • Fed Funds implied rates have pushed to joint highs for near-term meetings, with the 5.28% for July the touching the peak seen just before the May 1 FOMC decision.
  • Implied rates for meetings later this year also push higher on the day but remain within ranges, e.g. the Dec’24 at 4.92% (+2bps) vs the 5.05% seen pre-FOMC.
  • Cumulative cuts from 5.33% effective: 0.5bp Jun, 5bp Jul, 18bp Sep, 25bp Nov and 41bp Dec
  • Overnight Fedspeak from Goolsbee (’24 voter) – must take a longer look at inflation data, be patient – after a trio of Bostic (’24), Mester (’24 retiring June) and Collins (’25).
  • Bostic: Will take a longer time for rates to drive decisions.
  • Mester: Think inflation will come down but take longer, too soon to tell where inflation is going. Not take a big risk holding rates steady now with a healthy jobs market.
  • Collins: Will take longer to see progress needed to adjust rates, in a period where patience really matters. Underlying neutral rate may be higher in medium term.
  • A lighter day for Fed appearances ahead with focus instead on the FOMC minutes. Preview here.
  • 0940ET - Goolsbee (’24 voter) gives opening remarks (no text or Q&A)
  • 1400ET - FOMC minutes from Apr 30/May 1 meeting
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  • Fed Funds implied rates have pushed to joint highs for near-term meetings, with the 5.28% for July the touching the peak seen just before the May 1 FOMC decision.
  • Implied rates for meetings later this year also push higher on the day but remain within ranges, e.g. the Dec’24 at 4.92% (+2bps) vs the 5.05% seen pre-FOMC.
  • Cumulative cuts from 5.33% effective: 0.5bp Jun, 5bp Jul, 18bp Sep, 25bp Nov and 41bp Dec
  • Overnight Fedspeak from Goolsbee (’24 voter) – must take a longer look at inflation data, be patient – after a trio of Bostic (’24), Mester (’24 retiring June) and Collins (’25).
  • Bostic: Will take a longer time for rates to drive decisions.
  • Mester: Think inflation will come down but take longer, too soon to tell where inflation is going. Not take a big risk holding rates steady now with a healthy jobs market.
  • Collins: Will take longer to see progress needed to adjust rates, in a period where patience really matters. Underlying neutral rate may be higher in medium term.
  • A lighter day for Fed appearances ahead with focus instead on the FOMC minutes. Preview here.
  • 0940ET - Goolsbee (’24 voter) gives opening remarks (no text or Q&A)
  • 1400ET - FOMC minutes from Apr 30/May 1 meeting