After yesterday's better-than-expected Flash PMI data, as well as the hawkish Fed talk, money markets trimmed their bets for cuts a little but by roughly 5 basis points by year-end.
For year-end, we are currently at -49 basis points, meaning markets are just shy of fully pricing in two cuts for this year.
However, if he completely changes his tune, and talks up cuts due to the labour market, then we could see markets taking the current -49 basis points closer to 60, meaning pricing in a small premium of 3 cuts this year.
Hawkish Powell pushing back against September cut assumptions: USD▲, Yields▲, Equities▼, Gold▼
Dovish Powell confirming a September cut and concerned about labour: USD▼, Yields▼, Equities▲, Gold▲
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