STIR: Back To Nearly Fully Pricing Fed Sept Cut, Two Cuts Seen By End-2025

Ahead of next week's Fed decision, we've published our summary of FOMC participant communications since the June FOMC meeting, including MNI's Hawk-Dove Matrix and a recap of the latest Beige Book and June meeting minutes. 

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Eurozone flash consumer confidence was slightly stronger than expected in July, printing at -14.7 (vs -15.0 cons, -15.3 prior) for a four-month high. However, the index remains comfortably below the 2000-2019 average of -10.9.

• Markets will pay more attention to tomorrow’s July flash PMIs for a better gauge of broader economic conditions.
• A reminder that Q2 flash GDP for member states and the Eurozone as a whole are due next Tuesday and Wednesday.  Bloomberg consensus currently places Eurozone GDP at -0.1% Q/Q, notably below the ECB’s +0.2% projection in the June MPR.
• For consumption, analysts pencil in a 1.5% Y/Y reading (vs 1.4% prior), with the ECB projecting a 0.2% Q/Q sequential print.

GBP briefly edges to a new daily high as it benefits from the fade in the USD and US equities in the 40 minutes following the opening bell - with FX futures volumes picking up to suit the modest pick-up in price action.

• The latest price action has the USD on the backfoot, but the ranges really are contained here - the USD Index is yet to test yesterday's 97.305 lows, and a further wave of greenback sales will be needed to extend the losing streak posted off the mid-July highs.
• With today's NY cut passed, markets keep an eye on the post-ECB expiry pipeline: Even with the fade off highs in EUR/USD, the options interest remains lower for the balance of the week. Over $10bln options notional rolls off between 1.1620-65 into the Thursday, Friday NY cuts - the bulk of which expires just after the ECB press conference on Thursday - which could help contain rallies in spot over the next few days.