The market is running with the ‘several’ cuts theme

There were 68.4 basis points of cuts priced in for the Fed this year ahead of the FOMC decision. That’s risen to 72.4 bps since, likely in response to Powell saying that he could envisions anything from ‘several’ rate cuts this year to zero.

Pricing for June 2025 has also moved up to 157 bps from 150 bps.

I didn’t think he was particularly dovish but he would have known what the market was pricing in before the FOMC and didn’t push back on it. In a sense, that’s an endorsement and I think that’s how market participants are looking at it.

Elsewhere, US 2-year yields are down 6.7 bps to 4.29%, which is more than 100 bps below the Fed funds target.

This article was written by Adam Button at www.forexlive.com.