STIR: Fed Rates Within Monday Range, Next Cut Fully Priced For July
Apr-15 10:37
- Fed Funds implied rates are for the most part 2-2.5bp higher on the day for 2025 meetings but still within Monday’s range.
- Cumulative cuts from 4.33% effective: 5.5bp May, 20.5bp Jun, 39bp Jul, 56bp Sep and 84bp Dec.
- Rates for near-term meetings remain relatively sticky, awaiting a next key driver. Barring unpredictable headlines, that could come tomorrow with US retail sales for March before Fed Chair Powell on the economic outlook at 1330ET.
- Further out the curve, SOFR futures are up to 4.5 ticks lower on the day (largest declines in 1H26) as they underperform European rates which are closer to flat on the day.
- The terminal implied yield of ~3.30% in the U6 is 10bp below pre-Liberation Day levels.
- Fed Gov. Waller yesterday laid out two different scenarios for rate cuts depending on how tariff policy develops. So while he's clearly maintaining his easing bias, as one of the most dovish FOMC members, he delineates the two easing scenarios as "good news/lower tariff" and "bad news/large tariff" rate cuts. In the former, “rate cuts are very much on the table in the latter half of this year” rather than larger and earlier cuts in the latter.
- Today’s sole scheduled Fedspeak comes from Fed Gov. Cook at an alumni event after the close at 1910ET (text only) but with focus instead on Powell tomorrow.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
