What are markets pricing in for the Fed as we await Powell’s testimony later today?

What are markets pricing in for the Fed as we await Powell’s testimony later today? Wed 10 Jul 2019 05:53:18 GMT Author: ForexLive And odds of a 25 bps rate cut in July now stands at 98

5% after having been fully priced in almost since the June FOMC meeting.

But the key change has been odds of a 50 bps rate cut, which has fallen dramatically after having previously been around ~27% before the release of last Friday’s non-farm payrolls data Greg had a very nice preview on what markets will be looking out for in Powell’s testimony today Powell’s mention of an ounce of prevention is worth a pound of cure two weeks ago is what markets are feeding off right now ie expecting a 25 bps insurance rate cut but nothing more than that That shows that the risk going into Powell’s testimony is balanced on both sides of the equation If Powell decides to communicate further dovishness, it would spur bets of more aggressive easing by the Fed in the coming months However, if Powell decides to give the finger to Trump, that will put any chance of a July rate cut at risk Given how Fed funds futures are positioned, the latter scenario will generate the most buzz in markets and scope for dollar gains will be quite extensive But we have seen how politicised the Fed’s statement and communication has been in the past month, so unless Powell really does something out of the ordinary, I reckon he will just reaffirm current sentiment without leading markets to expect an aggressive easing cycle from the central bank He can’t frame or word it as an insurance rate cut directly but expect his tone and language to try and work towards that LON By continuing to browse our site you agree to our use of cookies , revised Privacy Notice and Terms of Service More information about cookies Got it! About Us
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