Fed Watch update: Chance of an FOMC June rate cut is sliding lower as data comes in hot

The latest data of note is the sizzling ISM manufacturing index:

• US March ISM manufacturing 50.3 vs 48.4 expected

It jumped into expansion for the first time since 2022 (check out that link above for the pretty pic of its performance). Production and new orders rose sharply. After the data Treasury yields climbed:

• Today’s jump in Treasury yields could be the start of an ominous technical signal

Strong economy, sticky inflation, its little wonder Fed officials are beginning to line up behind higher for longer and later rate cuts. These posts from me last week:

• Fed’s Waller says may need to hold current rate for longer than expected, no rush to cut
• Waller’s remarks have pumped up the US dollar
  • (ps still is too)
• More Fed’s Waller: The economy has supported the cautious approach by the Federal Reserve

• Still more from Fed’s Waller: If unemployment goes up no reason to panic
• Fed’s Bostic say he now anticipates only one rate cut this year
• If economy continues to be healthy, why would we cut rates

And markets are beginning to be swayed:

• “Why a Fed rate cut in June is not yet a done deal”

The CME’s FedWatch tool shows the probability of a June rate cut is sliding lower. I can;t believe its still above 50%, but give it a couple of days and it will be (IMO):

ps. As a counterpoint ex-Fed Clarida says there’s still a chance:

• Ex-Fed Vice Chair Clarida says FOMC could cut in June even if CPI stays high – here’s how

This article was written by Eamonn Sheridan at www.forexlive.com.