WSJ carried an article "Powell Dials Back Expectations on rate cuts" and the current Fed Fund Pricing implies 41 bps of rate cuts into 2024 with 23 bps of rate cuts priced into the Sep 2024 Policy as against the Fed SEP of 75 bps of rate cuts.
Chair Powell remarked:
"The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence"
Fed would leave rates at their current level “as long as needed”
We think policy is well positioned to handle the risks that we face”. “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work.”
USTs continued to sell off on a 6 bps rise in Real Rates. The Housing data release showed weakness. The Industrial Production data , however, rose 0.40% mom. USD Index continued to make cycle highs at 106.52 and I'm looking out for signs of an intermediate correction. 106.45 - 106.75 is the area I'm closely looking out for. The data calendar is light for the USD today and we may see some sideways consolidation today.
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