Traders Are Certain the Fed Will Cut in July, But Unsure What’s Next
- Powell’s testimony will be scrutnized for clues on rates
- Treasury 2-year yields have risen over 20bps from June low
This article is for subscribers only.
Lurking beyond traders’ apparently unwavering confidence that the Federal Reserve will cut interest rates this month is a more nebulous outlook about what the central bank will do after that.
Traders are still pricing a full quarter-point reduction in July, yet they have slowly scaled back views on how much easing will take place for all of 2019 -- lowering expectations to 64 basis points from around 80 basis points two weeks ago. At the same time, options traders are still adding to bets the Fed will embark on a series of cuts, rather than a one-and-done approach.