Fed Funds implied rates are 1-2bp lower out to mid-2025 following Powell’s press conference, leaving them little changed vs pre-decision levels.
Cumulative cuts from an assumed 4.58% effective: 18bp Dec, 29bp Jan, 45bp Mar and 68bp June.
Further out, Dec’25 SOFR yields have trimmed earlier declines for just 1.5bp lower and Dec’26 2.5bp lower post-Powell, marginally higher vs pre-statement.
Terminal yield at 3.715% for 87bp of cuts for the cycle vs 3.74% pre-Powell and 3.715% pre-decision.
“Even with today’s cut, policy is still restrictive” and “our baseline expectation is to move down gradually to neutral”, but “Nothing in the economic data suggests that the committee needs to be in a hurry to get [to neutral].”
Trump doubling down on the mass deportation plan as Powell was speaking (“we have no choice”, “it’s not a question of price tag” per bbg headlines) could also have fed into some flattening.
STIR: Dovish Rection To Powell Leaves Fed Funds Little Changed On Net
Last updated at:Nov-07 20:36By: Chris Harrison
STIR+ 1
Fed Funds implied rates are 1-2bp lower out to mid-2025 following Powell’s press conference, leaving them little changed vs pre-decision levels.
Cumulative cuts from an assumed 4.58% effective: 18bp Dec, 29bp Jan, 45bp Mar and 68bp June.
Further out, Dec’25 SOFR yields have trimmed earlier declines for just 1.5bp lower and Dec’26 2.5bp lower post-Powell, marginally higher vs pre-statement.
Terminal yield at 3.715% for 87bp of cuts for the cycle vs 3.74% pre-Powell and 3.715% pre-decision.
“Even with today’s cut, policy is still restrictive” and “our baseline expectation is to move down gradually to neutral”, but “Nothing in the economic data suggests that the committee needs to be in a hurry to get [to neutral].”
Trump doubling down on the mass deportation plan as Powell was speaking (“we have no choice”, “it’s not a question of price tag” per bbg headlines) could also have fed into some flattening.
