ICYMI – PIMCO now expect just 2 Federal Reserve rate cuts this year. Were previously at 3.

Friday’s jobs report from the US, nonfarm payrolls, was sizzling:

Bond giant Pacific Investment Management Company (PIMCO) has dialed back its forecast for Federal Open Market Committee (FOMC) rate cuts this year. The previous PIMCO projection was for 3, but they’ve dialled that back to 2 now as thier ‘base case’. A PIMCO rep spoke with Reuters after the NFP numbers on Friday:

  • this means a little bit less out of the Fed
  • the economy is proving for now that it can handle higher rates

Checking FedWatch you’ll see the pricing for a June rate cut is now bordering on a coin toss. I reckon the likelihood is closer to 10% than 50%. If you’ve been following along with my ‘no June rate cut for you!’ shouting this’ll come as no surprise.

FOMC members are piling on the later cut bandwagon:

And, I like this reasoning:

FedWatch update:

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