With that, traders have gone to almost fully price in a 25 bps rate cut for next month. Fed funds futures now show ~98% odds of a rate cut priced in. That is up slightly from ~89% before the inflation data. As for the year itself, traders are pricing in ~60 bps of rate cuts now and that's also just a marginal step up from ~57 bps before that.
So, what's next from here?
Kansas City Fed president Schmid - a voting member this year - was out quickly to say that he will dissent to a September rate cut even with these inflation numbers. Meanwhile, Richmond Fed president Barkin - not a voting member this year - was rather neutral in saying that the balance between inflation and unemployment is rather unclear currently.
As markets look to push the Fed's buttons, the question now is will policymakers push back? Or is it going to be another case where the Fed just gets bullied into a decision yet again as political pressures also weigh in?
So if the Fed is to try and push back or reaffirm market expectations, the latest they can do that is right after the non-farm payrolls data and just before the weekend hits that particular Friday.
As we approach the fall though, UBS and Goldman Sachs have made calls expecting to see an acceleration in price pressures in the months ahead. So if that starts to show up more significantly in the August report, it will make the September decision rather tricky especially if we don't hear more firm opinions from Fed policymakers over the coming weeks.
This article was written by Justin Low at investinglive.com.Hence then, the article about traders go all in on a fed rate cut for september was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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