Rate Cut Probabilities Have Dropped Significantly

While a majority of wise guys still expect the Fed to cut the Funds Rate tomorrow, the percentage has dropped significantly, from what I seem to remember as near-unanimous in the upper 90% area to a situation where a negative surprise actually has a decent chance, according to players who are guessing the outcome as part of making their living.

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Now, Jerome Powell would not be vindictive toward the bully on Twitter, would he? No, but he could be someone who can steer his committee to a view that just because the rest of the world’s CBs are rolling over and playing dead it does not mean it is quite time for the US Fed to do so. Especially since economists are still busy being surprised by positive economic data (relative to their forecasts). Set against this is the 10yr Treasury yield, which is on schedule to continue rising if this relationship is to hold true. From Yardeni.com

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