Jul 8, 2019

The market is still convinced the Fed will cut rates

June's strong U.S. jobs report certainly got investors to rethink their expectations for the Fed's upcoming July 30–31 policy meeting, but Fed funds futures prices show they still see a 0% chance Jay Powell and company don't cut U.S. interest rates.

Expand chart

Data: CME FedWatch Tool; Graphic: Naema Ahmed/Axios

Backdrop: The market also has pared back expectations for 3 hikes (or 75 basis points of cuts) by the end of the year, but only modestly. Investors now see the likelihood of 3 cuts by December as just under 50%.

What to watch: Powell will deliver his semi-annual Monetary Policy Report to Congress on Wednesday and Thursday. The Fed also will release its June meeting minutes on Wednesday.

Go deeper

Dion Rabouin

The extreme volatility in the Fed funds market

Data: Bloomberg, DB Global Research; Chart: Axios Visuals

Market participants overwhelmingly expect a 25 basis-point cut from the Fed at this month's policy meeting, but positioning has varied wildly over the last 2 months.

The big picture: Comments from Fed chair Jay Powell during a speech in Paris pushed the likelihood of a 50-point cut as high as 60% in mid-July, despite strong data prints on U.S. retail sales, unemployment and industrial production. Fed fund futures prices now show investors see just a 14% chance the central bank cuts rates by 50 basis points to a range of 1.75%–2.00%, according to data provided by Deutsche Bank Securities.

Go deeper: The case for a Fed rate cut

Keep ReadingJul 24, 2019

Dion Rabouin

A Fed fight may be brewing over interest rate cuts

Federal Reserve Chairman Jerome Powell speaks to an aide. Photo: Zach Gibson/Getty Images

The market got the signal loud and clear from Fed Chair Jerome Powell yesterday — an interest rate cut is coming in July — but that rate cut may push forward tensions within the central bank.

What's happening: At June's meeting, the Fed delivered the first non-unanimous rate decision of Powell's tenure, and judging by the minutes of the FOMC meeting released Wednesday, there is disagreement among members about whether a cut next month is warranted.

Go deeperJul 11, 2019

Courtenay Brown

Fed cuts interest rates for the first time since 2008

Federal Reserve Chairman Jerome Powell speaks at a press conference in June. Photo: Ting Shen/Xinhua via Getty Images

In its biggest decision since 2015, the Federal Reserve said on Wednesday it would slash its benchmark interest rate by a quarter point, as expected, in an effort to extend the economic boom and boost weak inflation.

Between the lines: Speaking to reporters at a press conference following the decision, Fed Chair Jerome Powell re-adjusted the market‘s expectations of a series of more rate cuts by the end of the year. Stocks dropped sharply during the press conference, but after regaining some ground, the Dow finished down more than 300 points, while the S&P fell 1.19% and the Nasdaq dropped 1.1%.

Go deeperJul 31, 2019