Wednesday, July 10, 2019

Merrill: "The Fed cut is on for July"

by Calculated Risk on 7/10/2019 12:06:00 PM

A few excerpts from a Merrill Lynch research note: The Fed cut is on for July

Fed Chair Powell delivered a dovish testimony, hinting strongly at an upcoming cut. We now expect a 25bp cut at the July 31st meeting followed by two more cuts at the next two meetings. We are sticking with our forecast of a cumulative 75bp of easing … The Fed seems to be willing to dismiss the better data from the US and instead is focusing on the weaker global data. Indeed, when Powell was asked if the strong jobs report changed his views on cuts, he stated "no". Rather Powell emphasized that "it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted."