Recent price action in the CME's 30-day Fed Funds Futures has ruled out one cut for 2024. As of the end of 2023, the spread between the front-month Fed Funds Futures and the deferred (December) ones indicated a 150-155 basis points spread, suggesting that the markets were anticipating six cuts in 2024. However, recent developments have prompted a reevaluation, making market participants rethink the likelihood of six cuts.
Economic Developments:
On January 4, ADP NonFarm data reported an addition of 164,000 private jobs, surpassing estimates of 115,000. Initial and Continuing claims for the first week of January also demonstrated strength. The question arises: If the labor market remains tight and inflation is returning to the 2% target, does the Fed need to implement six cuts?
What’s Next?
The market will continue to be data-dependent, mirroring the Fed's approach. This Friday's job data will provide clarity on the labor market, which will include Average Hourly Earnings, Unemployment Rate, and NonFarm payrolls. These factors will play a pivotal role in shaping the market's perception of the interest rate landscape.
The recent price action in equity markets have experienced a sell-off, with one cut taken off the table. The question remains: Will equity markets continue to react strongly to the possibility of a single 25 basis point cut? Or will the bond market begin to take more interest rate cuts off of the table?
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Economic Developments:
On January 4, ADP NonFarm data reported an addition of 164,000 private jobs, surpassing estimates of 115,000. Initial and Continuing claims for the first week of January also demonstrated strength. The question arises: If the labor market remains tight and inflation is returning to the 2% target, does the Fed need to implement six cuts?
What’s Next?
The market will continue to be data-dependent, mirroring the Fed's approach. This Friday's job data will provide clarity on the labor market, which will include Average Hourly Earnings, Unemployment Rate, and NonFarm payrolls. These factors will play a pivotal role in shaping the market's perception of the interest rate landscape.
The recent price action in equity markets have experienced a sell-off, with one cut taken off the table. The question remains: Will equity markets continue to react strongly to the possibility of a single 25 basis point cut? Or will the bond market begin to take more interest rate cuts off of the table?
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.