STIR: Implied Fed Cuts Complete Post-CPI Comeback On Retail Sales
The futures-implied Fed funds rate path took a dovish turn Friday with a weak January retail sales report that cast doubt on the strength of the US consumer going into 2025 (Atlanta Fed's GDPNow fell sharply to 2.3% from 2.8% prior).
- The first 25bp rate cut is fully priced by September, vs October at the end of Thursday's session. Friday saw 8bp added to the 2025 rate cut path.
- For the week, there's been an uptick in cumulative 2025 cuts (41bp vs 36bp at the end of last week) - and that's despite the well-above-expected CPI readings Wednesday (which saw implied cuts reach a low of 26bp).
- See table below.
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Prior Session (Feb 13) | Chg Since Then (bp) | End of Last Week (Feb 07) |
| Mar 19 2025 | 4.32 | -0.6 | -0.6 | 4.32 | 0.0 | 4.30 |
| May 07 2025 | 4.28 | -5.3 | -4.7 | 4.29 | -1.3 | 4.26 |
| Jun 18 2025 | 4.18 | -15.2 | -9.9 | 4.22 | -3.9 | 4.18 |
| Jul 30 2025 | 4.13 | -20.2 | -5.0 | 4.18 | -5.0 | 4.13 |
| Sep 17 2025 | 4.04 | -29.5 | -9.3 | 4.10 | -6.2 | 4.07 |
| Oct 29 2025 | 3.99 | -34.3 | -4.8 | 4.06 | -7.1 | 4.02 |
| Dec 10 2025 | 3.92 | -40.7 | -6.4 | 4.00 | -7.6 | 3.97 |
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Rates Rally After Core CPI Misses Estimates, First Cut Targets July
- Treasuries are trading near the top end of the session range after gapping higher this morning on slightly lower than expected Core & Supercore CPI data.
- Across core categories, below-expected figures in the aggregates were reported: core goods (0.05% vs 0.12% expected, 0.31% prior) and core services (0.27% vs 0.30% expected, 0.28% prior) were each a touch under analyst expectations.
- NY Fed’s Williams (permanent voter) said Treasury yields haven’t been driven by inflation expectations and that yields instead reflect economic strength and fiscal uncertainty. There have been somewhat mixed views of FOMC members on long end yield drivers recently.
- Mar'25 10Y futures are trading at 108-09.5 (+30) after the bell vs. 107-16.5 pre-data, session high at 108-13, still below initial technical resistance at 108-17.5/109-06 (20-day EMA / High Dec 31). Curves Curves mixed however: 2s10s -3.416 at 38.723, 5s30s +5.544 at 43.118.
- Projected rate cuts through mid-2025 moved forward on the calendar with July now fully pricing in a 25bp cut. Current vs. this morning levels* as follows: Jan'25 steady at -0.7bp, Mar'25 at -7.4bp (-4.9bp), May'25 -13.5bp (-10.3bp), Jun'25 -22.9bp (-17.7bp), Jul'25 at -27.2bp (-21.7bp).
- Focus turns to a slew of data on Thursday: Weekly Jobless Claims, Retail Sales, Import/Export Indexes and regional Fed services and business outlooks all at 0830ET. Business Inventories and NAHB Housing Market Index at 1000ET. No scheduled Fed speakers as yet - Fed enters Blackout period Friday at midnight.
AUSSIE 3-YEAR TECHS: (H5) Trend Structure Remains Bearish
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.190/360 High Dec 31 / High Dec 11
- PRICE: 96.060 @ 20:02 GMT Jan 15
- SUP 1: 95.830 - 1.000 proj of the Dec 11 - 20 - 31 price swing
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
A bear cycle in Aussie 3-yr futures remains intact and short-term gains are considered corrective. The recent move down reinforces the bear theme and the contract has traded through the December low. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low. On the upside, a reversal higher would instead signal scope for an extension towards 96.360, the Dec 11 high. Further out, the key resistance is at 96.730, the Sep 17 high.
EURGBP TECHS: Bullish Outlook
- RES 4: 0.8530 76.4% retracement of the Aug 8 - Dec 19 downleg
- RES 3: 0.8494 High Aug 26 ‘24
- RES 2: 0.8471 61.8% retracement of the Aug 8 - Dec 19 downleg
- RES 1: 0.8463 High Jan 15
- PRICE: 0.8413 @ 20:10 GMT Jan 15
- SUP 1: 0.8385 Low Jan 14
- SUP 2: 0.8325/8284 50-day EMA / Low Jan 8
- SUP 3: 0.8263 Low Dec 31
- SUP 4: 0.8223 Low Dec 19
EURGBP maintains a firmer tone and the cross initially traded higher on Wednesday. The latest recovery undermines the recent bearish theme and suggests scope for a stronger short-term recovery. 0.8376, the Nov 19 high and a key resistance, has been cleared. Note too that 0.8448, the Oct 31 high, has been pierced, a clear break of this hurdle would strengthen the bullish theme. Support at the 50-day EMA is at 0.8325.
