Market Prices in Aggressive Rate Cuts
According to the CME FedWatch Tool, traders are fully pricing in a 25-basis-point cut this week. Deutsche Bank projects an additional 25 bps cuts at each of the Fed’s remaining three meetings this year, which would lower the federal funds rate to 3.50%-3.75%.
Expectations of looser policy have weighed on the dollar, reducing its yield advantage. Market focus now turns to Chair Jerome Powell’s press conference, where his tone will shape views on the Fed’s policy path into year-end.
Fed Board Developments Add to Focus
On Monday, the US Senate narrowly confirmed Stephen Miran to the Fed Board of Governors, replacing Adriana Kugler. Meanwhile, a US appeals court rejected an attempt to remove Governor Lisa Cook, reinforcing the central bank’s independence after weeks of uncertainty.
Retail Sales Data Could Shift Expectations
Tuesday’s US Retail Sales report, due at 12:30 GMT, is expected to show a 0.3% rise. A stronger reading could temper expectations of deeper easing, while weaker figures may bolster bets on further cuts.
