STIR: Market Moves To Price 50bp Of Fed Cuts Through December After Soft CPI
Jun-11 12:59
Softer-than-expected CPI data drives a dovish reaction in Fed pricing, leaving 50bp of cuts priced through year-end, with no move priced for this month, 4.5bp through July, 20bp through September and 33bp through October.
- Pre-data pricing showed 0bp for June, 3bp of cuts for July, 16bp through September, 27bp through October and 42bp through year-end.
- Dec pricing tested the May hawkish extreme of ~41bp of cuts being priced through December earlier in the NY morning.
- Terminal rate pricing implied by the SOFR strip (SFRZ6) now 3.31%, comfortably within the multi-week range. SFRZ6 has added 14.0bp since the data.
- As noted elsewhere, the supercore reading was below all estimates that we read (driving much of the market move), as were rental measures. Note that food and energy prices bucked the wider trend and were particularly firm.
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FRANCE T-BILL AUCTION RESULTS: 14/17/27/49-week BTFs
May-12 12:58
| Type | 14-week BTF | 17-week BTF | 27-week BTF | 49-week BTF |
| Maturity | Aug 20, 2025 | Sep 10, 2025 | Nov 19, 2025 | Apr 22, 2026 |
| Amount | E2.993bln | E600mln | E1.797bln | E1.998bln |
| Target | E2.6-3.0bln | E0.2-0.6bln | E1.4-1.8bln | E1.6-2.0bln |
| Previous | E2.993bln | E498mln | E1.992bln | E1.794bln |
| Avg yield | 2.057% | 2.042% | 2.023% | 1.985% |
| Previous | 2.072% | 2.428% | 1.982% | 1.901% |
| Bid-to-cover | 3.96x | 5.61x | 4.15x | 3.36x |
| Previous | 4.04x | 7.14x | 3.25x | 4.05x |
| Previous date | May 05, 2025 | Feb 17, 2025 | May 05, 2025 | May 05, 2025 |
BOE: Mann's slides more theoretical rather than giving a neutral estimate
May-12 12:54
Mann has begun speaking. The slides on the website appear to be more theoretical and don't really give at first glance an explicit estimate of where the neutral rate is right now.
BOE: Mann due on the next BOE Watchers' Panel
May-12 12:46
- Mann will participate in the 13:50BST panel entitled "The neutral rate of interest". The accompanying slides will be available here on the BOE website.
- Mann herself as a “activist” member and has recently been hard to predict in her voting record. She had been the most hawkish member of the MPC – continually dissenting against rate cuts, but she switched her view in February, arguing for a larger 50bp cut to 4.25% than the majority of the MPC favoured but still noting that she preferred Bank Rate to be kept in restrictive territory. She then voted against a sequential cut in March and again at this meeting.
- She has previously cited expectations in the MaPS which had previously seen the median neutral rate of interest at 3.50% - this fell to 3.25% in the most recent survey. She has always been very forthright about her views and explained her voting decisions, so we will be watching this appearance closely.
