The evolution of the Fed's futures curve over the past month largely illustrates:
Today's U.S. Consumer Price Index report will do little to change the outlook for the remaining Federal Open Market Committee meeting decisions this year, but it will play a role in determining market confidence in the Fed's outlook for next year especially in the first six months.
Previously traders were somewhat convinced we might get the first rate cut in March 2024.
But now trying to price a rate cut in June 2024 seems a bit questionable especially if inflation were to rise today again.
The main reason is that U.S. economic data remains resilient, especially consumer activity. As long as employment conditions do not deteriorate rapidly and inflation data continues to hold on to a slowing trend, the Fed has all the right settings to go ahead with steadying high-interest levels for as long as possible.
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