There has been “some” signaling for 50-basis points and the arguments of both beginning points sound. Our Co-CEO Michael Naidrich and Head of US Rates Gregory (Greg) Faranello, CFA look at one of the more interesting Fed meetings in quite some time in this month’s Fed Preview video. At the peak today we were priced 62% for a 50-basis point cut on Wednesday.

With the balance between inflation and employment much more aligned one thing is for sure: official rates are too high. We made the case 100-basis points to start. What is neutral and how do we get there? For US Treasuries, already in the mid-3s. We’ve come a long way. And forward SOFR already priced to the Fed’s longer run neutral rate of 2.80%. Speed and magnitude will matter from here. It’s not one of those typical cycles that we’ve become accustomed to where the reasons are clear.