An interesting snippet from Deutsche Bank, expecting 25bp rate cuts ahead, but read on for the “however”.
DB say that while Friday’s … payrolls report was disappointing:
- the data
did not rise to the “significant deterioration” Waller noted was needed
for larger (50bp) rate cuts. - So our economists keep to their
expectations for a 25bps cut next week
And then add:
- The
risk for the Fed is if and when job losses actually arrive in the
payrolls report, you tend to get little warning - With hiring now relatively soft it wouldn’t take much
for the Fed to be behind the curve and a string of 50bp cuts to follow. -
With markets now pricing in over 250bps of cuts by January 2026 there
has to be a reasonably high market expectation in the fixed income space
of this policy error occurring
This article was written by Eamonn Sheridan at www.forexlive.com.