Despite a strong US Flash PMI release on Friday, money market bets for the Fed haven’t changed much.
Fed Interest Rate Expectations
The data had forecast an easing of around 47 basis points by the end of the year, and expectations remained very close to this figure despite the situation.
It is important to keep in mind that there has been a disconnect between quantitative data (surveys such as PMIs) and hard data for some time now, and hard data continues to show moderate growth and inflation .
So it’s perhaps no surprise to see markets sticking to their view of two cuts by the end of the year when looking at the bigger picture.
It’s hard to see Friday’s PCE data causing any significant emotion unless we see some truly shocking discrepancies.
With all the political risk premia in play, the dollar hasn’t really been bothered, with the DXY trading very close to the psychological level of 106.00 after Friday’s data.
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