Morgan Stanley pushes back Fed rate cut forecast to September

On the change, Morgan Stanley notes hat “a reversal in key components points to disinflation ahead, but given the lack of progress in recent months it will take a bit longer for the FOMC to gain confidence to take the first step”. This fits with what traders are looking at as well, with the odds of a September rate cut seen at ~82% currently. The total rate cuts priced in for the year is at ~44 bps, not much changed from after the US jobs report last week.

This article was written by Justin Low at www.forexlive.com.