Market Overview Analysis by James Picerno covering: United States 2-Year. Read James Picerno's latest article on Investing.com
data for May, the crowd was newly confident, again, that the Fed would soon start cutting interest rates. Treasury yields were sliding andwere rising that policy easing was near. But the May jobs report flipped the script with news of stronger-than-expected hiring.
The Fed funds futures market this morning is pricing in modest odds that the first rate cut will now arrive at the November 7 FOMC meeting. A September rate cut, which was considered moderately likely before Friday’s jobs data, is now estimated as a coin flip.continues to trade well below the current Fed funds rate, but the market in recent weeks has pared the spread. In other words, this key Treasury yield is also pricing in lower odds that a rate cut is near relative to recent history.
The joker in the deck is Wednesday’s consumer price data for May, which will be published several hours ahead of the Fed’s announcement that day. Economists are expecting inflation’s pace will remain comparable to April’s rise. Sticky inflation, in sum, is still the crowd’s outlook.
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