STIR: Modest Dovish Move In Fed Pricing Following PCE
Jun-27 12:45
Modest dovish reaction in Fed pricing as the personal spending and income readings come in on the softer side, while unrounded core PCE is a low +0.2% M/M (+0.179%).
- Moves are contained, with ~6bp priced into FOMC-dated OIS for July, 28.5bp through September, 45.5bp through October and 65.5bp through December.
- Contracts are 0.5-2.5bp more dovish vs. pre-data levels, with the most recent run of data generally leaning dovish and speculation surrounding Fed Chair Powell’s successor on the rise
- FOMC-dated OIS priced ~51.5bp of cuts through year-end as of last Friday’s close.
- SOFR-implied terminal rate pricing in to 3.07% post-data vs. 3.085% beforehand.
- Final UoM sentiment & inflation expectations data due this afternoon.
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