首页 News 正文

Is it difficult to drop 50 basis points directly? After the release of the CPI report, the expectation of the Federal Reserve cutting interest rates by 25 basis points in September has "prevailed"

增恶呀渐失
1201 0 0

After the release of the high-profile US CPI data in July, investors in the US bond market strengthened their bets on the US Federal Reserve officials to cut interest rates by 25 basis points in September, while the expectation of a straight cut of 50 basis points cooled.
The pricing of the interest rate swap market shows that traders' latest overnight pricing for the Fed's September meeting rate cut is 32 basis points (more inclined towards 25 basis points). The Chicago Mercantile Exchange's Federal Reserve observation tool also showed that the probability of the Fed cutting interest rates by 25 basis points at the meeting increased to 64%, while the probability of cutting interest rates by 50 basis points was only 36%.
Earlier this week, the probability of a 25 basis point and 50 basis point rate cut in September was almost 50-50.
Looking back at the performance of the overnight US Treasury market, the market situation was quite volatile after the release of CPI data. The yield of 2-year US Treasury bonds experienced an "elevator" trend with fluctuations of more than ten basis points in a short period of time, but ultimately failed to break through the 4% mark.
As of the end of the New York trading session, the final rise and fall of US bond yields varied among different maturities. Among them, the yield of 2-year US Treasury bonds rose 2.8 basis points to 3.97%, the yield of 5-year US Treasury bonds rose 0.6 basis points to 3.684%, the yield of 10-year US Treasury bonds fell 0.9 basis points to 3.84%, and the yield of 30-year US Treasury bonds fell 3.4 basis points to 4.129%.
David Kelly, Chief Global Strategist at JPMorgan Asset Management, stated in an interview that the CPI data confirms that inflation is subsiding, as the data is close to expectations. Therefore, investors began to sell based on the selling sentiment after the news was released, which is the current situation in the bond market.
In Wednesday's trading, the option flow data linked to the guaranteed overnight financing rate (closely tracking the central bank's policy path) reflected many traders closing their bets on a 50 basis point interest rate cut. Due to the pricing tendency of the swap market towards a 25 basis point rate cut rather than a direct 50 basis point drop, other related traders seem to have adjusted their dovish bets as well.
The data released by the US Bureau of Labor Statistics on Wednesday showed that the US CPI in July fell below 3% year-on-year for the first time since 2021, at 2.9%. The core CPI excluding volatile food and energy prices for the month increased by 3.2% year-on-year and 0.2% month on month.
This report may give the Federal Reserve sufficient reason to start cutting interest rates at its next meeting on September 17-18. The PCE Price Index, the preferred inflation indicator of the Federal Reserve released later each month, is approaching the Fed's 2% target, and Fed Chairman Powell has hinted that the Fed is likely to cut interest rates in September.
Of course, in the latest CPI report, inflation in certain core service categories, including housing rent and car insurance, remains high. This is also why many industry insiders are more inclined to support a 25 basis point interest rate cut overnight. However, it can be foreseen that although people's expectations for a 25 basis point interest rate cut are currently higher, the CPI data itself may not be enough to draw a definitive conclusion. The current performance of the job market data may have more indicative significance for how much interest rate cuts should be made.
Lindsay Rosner, Head of Fixed Income at Goldman Sachs Asset Management, stated that inflation data "cleared the way for a 25 basis point rate cut in September, but at the same time did not completely close the possibility of a 50 basis point rate cut.
Neil Sutherland, portfolio manager at Schroder Investment Management, pointed out that "we are indeed seeing a weaker labor market. As the market debates the size of the Fed's possible interest rate cut in September, labor market data may give us a clearer understanding.
Renowned journalist Nick Timiraos, known as the "New Federal Reserve News Agency," stated on Wednesday after the release of inflation data that the July CPI data has paved the way for the Federal Reserve to begin cutting interest rates at its September meeting. He expects that the focus of discussion at the Federal Reserve's September meeting will be on the scale of interest rate cuts, whether to follow the traditional 25 basis point cut or a larger 50 basis point cut. The reason why the scale of interest rate cuts may become a focus of discussion is that the US labor market has recently shown potential signs of weakness, but the inflation data released on Wednesday has not resolved this debate.
Timiraos also believes that this debate may ultimately be determined by labor market reports, including weekly initial jobless claims and the August non farm payroll report to be released on September 6th. If we want to cut interest rates by 50 basis points, it depends on whether there is a bad situation in the labor market.
Chicago Fed President Austan Goolsbee pointed out on Wednesday that he is increasingly concerned about the labor market rather than inflation, given recent progress in price pressures and disappointing employment data. He declined to comment on the possibility and magnitude of the Federal Reserve's interest rate cut at the September meeting.
CandyLake.com 系信息发布平台,仅提供信息存储空间服务。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
您需要登录后才可以回帖 登录 | 立即注册

本版积分规则

  •   知名做空机构香橼研究(Citron Research)周四(11月21日)在社交媒体平台X上发布消息称,该公司已决定做空“比特币大户”微策略(Microstrategy)这家公司,并认为该公司已经将自己变身成为一家比特币投资基金 ...
    caffycat
    昨天 11:18
    支持
    反对
    回复
    收藏
  •   每经AI快讯,11月20日,文远知行宣布旗下自动驾驶环卫车S6与无人扫路机S1分别在新加坡滨海湾海岸大道与滨海艺术中心正式投入运营。据介绍,这是新加坡首个商业化运营的自动驾驶环卫项目。 ...
    star8699
    3 天前
    支持
    反对
    回复
    收藏
  •   上证报中国证券网讯(记者王子霖)11月20日,斗鱼发布2024年第三季度未经审计的财务报告。本季度斗鱼依托丰富的游戏内容生态,充分发挥主播资源和新业务潜力,持续为用户提供高质量的直播内容及游戏服务,进一步 ...
    goodfriendboy
    3 天前
    支持
    反对
    回复
    收藏
  •   人民网北京11月22日电 (记者栗翘楚、任妍)2024广州车展,在新能源汽车占据“半壁江山”的同时,正加速向智能网联新能源汽车全面过渡,随着“端到端”成为新宠,智能驾驶解决方案成为本届广州车展各大车企竞 ...
    3233340
    昨天 17:06
    支持
    反对
    回复
    收藏
增恶呀渐失 新手上路
  • 粉丝

    0

  • 关注

    0

  • 主题

    1