Fed funds futures are flying
Fed funds futures are flying alongside the Treasury-led, safe haven rally in sovereign bonds. Deferred contracts are outperforming and the gains suggest increasing odds for a late 2019 rate cut. The market is pricing in about 15 bps in cuts by the end of the year, and is showing about 40 bps in easing by mid-2020. Analysts continue to believe the Fed will end up hiking rates one more time late this year as the economy outperforms and inflation ticks up. Meanwhile, President Trump has continued to chime in on the Fed. In comments on Fox Business Network, he said he hopes the Fed "won't do the tightening." The FOMC suggested this week it's on hold for the year. Additionally, Axios reports the president it considering Herman Cain and Stephen Moore to fill the two vacant seats on the Federal Reserve Board. Analysts've heard those names before.