Big Changes in Fed Interest Rate Cut Expectations This Year and Next

Link: https://mishtalk.com/economics/big-changes-in-fed-interest-rate-cut-expectations-this-year-and-next/

Graphic:

Excerpt:

I captured rate cut expectations before and after the Friday jobs reports. Let’s take a look.

The current rate is 5.25%-5.50% effectively 5.37%.

  • Sep 2024: -0.13 PP to 4.94% (-0.43 PP from current) 1.7 quarter-point cuts
  • Nov 2024: -0.30 PP to 4.53% (-0.83 PP from current) 3.3 quarter-point cuts
  • Dec 2024: -0.34 PP to 4.21% (-1.16 PP from current) 4.6 quarter-point cuts
  • Jan 2025: -0.36 PP to 3.98% (-1.39 PP from current) 5.6 quarter-point cuts
  • Mar 2025: -0.38 PP to 3.71% (-1.66 PP from current) 6.6 quarter-point cuts

Those odds were smack in the middle of volatility.

The CME website now shows data as of August 1 (no change on Friday), so they have something messed up.

The chart above reflects the huge volatility we saw in bond yields on Friday.

….

Are too many cuts priced in or not enough?

That’s the question. I expect two cuts in September. Looking out to next year, I think too many cuts are priced in.

Author(s): Mike Shedlock

Publication Date: 3 Aug 2024

Publication Site: Mish Talk

Ominous Technical Trends for US Treasury Bulls, Three Durations

Link:https://mishtalk.com/economics/ominous-technical-trends-for-us-treasury-bulls-three-durations/

Graphic:

Image courtesy of Stockcharts.Com, inset by Centerpoint Securities, annotations by Mish.

Excerpt:

Technical patterns on 2-year, 10-year, and 30-year US treasuries all suggest yields are heading higher. Let’s also discuss the supporting fundamental case.

Centerpoint explains “An ascending triangle chart pattern is a bullish technical pattern that typically signals the continuation of an uptrend. They can signal a coming bullish breakout above an area of resistance after it has been tested several times.”

Many people do not believe in technical patterns, others believe in nothing else. Certainly, technical patterns fail often enough.

My take is they work best as entry and exit point strategies, especially when fundamentals align.

Author(s): Mike Shedlock

Publication Date: 3 Apr 2024

Publication Site: MishTalk