STIR: July Fed Cut Priced Back In
Feb-21 21:14
The next Fed rate cut is again fully priced for the July meeting, following a 6bp futures-implied move today on the back of soft Services PMI data exacerbated in the afternoon by a risk-off move in equities.
- This comes following a run of mixed-at-best data (retail sales, housing starts, various consumer and business surveys) in the last week and is the first time a July cut has been priced since Feb 7 (just prior to January payrolls data) - previously it was priced for September.
- There's now almost two rate cuts priced through the end of the year (47bp through the December FOMC, an increase of 9bp on the day), the most seen since Feb 5.
- For the week, implied 2025 rate cuts have ranged between 35 and 48bp (the latter seen in the last hour of trade)
- See our US Macro Weekly for more on what to watch next week, with PCE and GDP the data highlights.
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Prior Session (Feb 20) | Chg Since Then (bp) | End of Last Week (Feb 14) |
| Mar 19 2025 | 4.32 | -1.5 | -1.5 | 4.32 | -0.9 | 4.32 |
| May 07 2025 | 4.25 | -8.4 | -6.9 | 4.28 | -3.1 | 4.28 |
| Jun 18 2025 | 4.14 | -19.4 | -11.0 | 4.18 | -4.2 | 4.18 |
| Jul 30 2025 | 4.07 | -26.2 | -6.8 | 4.13 | -6.0 | 4.13 |
| Sep 17 2025 | 3.97 | -35.7 | -9.5 | 4.04 | -6.5 | 4.04 |
| Oct 29 2025 | 3.92 | -41.2 | -5.5 | 4.00 | -8.0 | 3.99 |
| Dec 10 2025 | 3.86 | -47.3 | -6.1 | 3.95 | -8.8 | 3.93 |
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ASIA: Coming Up In The Asian Session On Thursday
Jan-22 20:58
| 0400GMT | 1200HKT | 1500AEDT | Thailand Dec Customs Trade Balance |
| 0500GMT | 1300HKT | 1600AEDT | Singapore Dec CPI |
| 0800GMT | 1600HKT | 1900AEDT | Taiwan Dec Industrial Production |
| 0820GMT | 1620HKT | 1920AEDT | Taiwan Dec Money Supply |
ASIA STOCKS: Coming Up In The Asia-Pac Session On Thursday
Jan-22 20:58
| 2145GMT | 0545HKT | 0845AEDT | New Zealand Nov Net Migration SA |
| 2300GMT | 0700HKT | 1000AEDT | South Korea 4Q GDP |
| 2350GMT | 0750HKT | 1050AEDT | Japan Dec Trade Balance |
| 2350GMT | 0750HKT | 1050AEDT | Japan Jan Investor Flows |
| 0000GMT | 0800HKT | 1100AEDT | Australia to Sell A$100M 0.25% 2032 Inflation-Linked Bonds |
| 0135GMT | 0935HKT | 1235AEDT | China Dec Swift Global Payments |
| 0235GMT | 1035HKT | 1335AEDT | New Zealand To Sell 30, 31, 36, & 41 Bonds |
| 0330GMT | 1130HKT | 1430AEDT | Japan to Sell 3-Month Bills |
| 0500GMT | 1300HKT | 1600AEDT | Japan Dec Tokyo Condominiums for Sale |
US TSYS: Decent 20Y Bond Auction Re-Open Helped Treasuries Bounce Off Lows
Jan-22 20:20
- Treasuries look to finish weaker Wednesday, off midday lows after the $13B 20Y Bond auction finally broke a string of poorly received sales, trading 1bp through: 4.900% high yield vs. 4.910% WI; 2.750x bid-to-cover vs. prior month's 2.50x.
- Lite data session: MBA composite mortgage applications increased 0.1% last week (sa) to consolidate the 33% jump the week prior; US DEC. LEADING INDICATOR FALLS 0.1% M/M; EST. -0.1% (Bbg).
- Late short covering saw the Mar'25 10Y contract trades 108-20 (-3.5) vs. 108-14 low, well above initial technical support at 108-00/107-06 (Low Jan 16 / 13 and the bear trigger). 10Y yield gained .0122 to 4.5886, curves flatter: 2s10s -.050 at 29.961, 5s30s -2.161 at 38.997.
- Pres Trump’s tariff threat towards Russia weighed on Treasuries earlier in the session while underpinning US$ (BBDXY +.08 t 1302.69 late). Higher core yields have also been supportive of this price dynamic, while a 4bp move for 5-year treasury yields also provided support to the broader dollar index.
- Cross asset roundup: Spot gold has risen by a further 0.4% to $2,756/oz on Wednesday, bringing the yellow metal to its highest level since October 31. WTI lost some ground on the day, with outages on the US gulf coast bearish for oil. However, it has struggled for clear direction, with earlier movement driven by Trump comments towards the war in Ukraine. WTI Mar 25 is down by 0.5% at $75.4/bbl.
