Bank of America joins consensus on quarter-point Fed cut this month
Bank of America analysts clambered aboard the bandwagon expecting a rate cut at the conclusion of the Fed’s two-day meeting next Wednesday. In a note published Monday, they wrote:
“Several factors drive our new call: (1) the jump in the u-rate to 4.44% in the Sep jobs report; (2) Williams’ endorsement of a cut after the data release, until which time markets were leaning toward a hold; (3) weakness in the ADP data and the Beige Book’s labor market assessment; and (4) the fact that Chair Powell hasn’t pushed back — either directly or via the press — against market pricing of an 80%+ chance of a cut going into the blackout period, which began on Saturday.”
Just for the record, the market — and most of Wall Street’s Fed watching class — has largely already come to the same conclusion.
The Fed funds futures market is pricing in a nearly 88% probability of such a snip at the meeting, according to the CME’s FedWatch tool, up from 63% a month ago. That’s also essentially where event contracts are trading.
(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. Event contracts trading is offered by Robinhood Derivatives, LLC, a registered futures commission merchant with the CFTC.)
