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US TSYS: Rates Extend Post-Rate Cut Highs, Dovish Reaction To Powell Prsser

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Treasury futures gradually traded off Wednesday's post-election lows Thursday, eventually extending gains after the FOMC delivered an expected 25bp rate cut as Fed Chairman Powell's presser deemed dovish on net.
  • Currently, Dec'24 10Y futures trade +23 at 110-08.5 vs. 110-13 high, below initial technical resistance at 110-21.5 (yesterday's high), 10Y yield at 4.3335% (-.0980).
  • Powell called the 25bp rate cut a "further recalibration" of policy, saying again that the Committee is "not on any preset course. We will continue to make our decisions meeting by meeting". Overall Powell sounded relaxed about inflation, with very little to suggest that the Committee's outlook has changed very much since the last meeting.
  • Powell again highlighted that the labor market is "essentially in balance" and "is continuing to cool, albeit at a modest rate, and we don't need further cooling, we don't think, to achieve our inflation mandate...we don't want the labor market to soften much from here".
  • Fed Funds implied rates are 1-2bp lower out to mid-2025 following Powell’s press conference, leaving them little changed vs pre-decision levels. Cumulative cuts from an assumed 4.58% effective: 18bp Dec, 29bp Jan, 45bp Mar and 68bp June.
  • Focus turns to Friday's UofM sentiment and inflation expectations.
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  • Treasury futures gradually traded off Wednesday's post-election lows Thursday, eventually extending gains after the FOMC delivered an expected 25bp rate cut as Fed Chairman Powell's presser deemed dovish on net.
  • Currently, Dec'24 10Y futures trade +23 at 110-08.5 vs. 110-13 high, below initial technical resistance at 110-21.5 (yesterday's high), 10Y yield at 4.3335% (-.0980).
  • Powell called the 25bp rate cut a "further recalibration" of policy, saying again that the Committee is "not on any preset course. We will continue to make our decisions meeting by meeting". Overall Powell sounded relaxed about inflation, with very little to suggest that the Committee's outlook has changed very much since the last meeting.
  • Powell again highlighted that the labor market is "essentially in balance" and "is continuing to cool, albeit at a modest rate, and we don't need further cooling, we don't think, to achieve our inflation mandate...we don't want the labor market to soften much from here".
  • Fed Funds implied rates are 1-2bp lower out to mid-2025 following Powell’s press conference, leaving them little changed vs pre-decision levels. Cumulative cuts from an assumed 4.58% effective: 18bp Dec, 29bp Jan, 45bp Mar and 68bp June.
  • Focus turns to Friday's UofM sentiment and inflation expectations.