Fed funds futures have a light bid
Fed funds futures have a light bid after the weaker housing starts/permits report. A 25 bp rate cut is fully factored in for the July 30, 31 FOMC. There's some small risk for a 50 bps easing but analysts suspect it's very low given even the Fed's description of a "solid" economy. The Fed has basically called this an "insurance" move, due mostly to low inflation and weakness in overseas economies. Several on the FOMC have even challenged the need for a reduction in rates currently. However, futures do remain priced for a couple of quarter point cuts this year, and that was supported by comments from the dovish voter Evans yesterday, again mostly predicated mostly on inflation. The ugly earnings report from CSX could be an ominous sign on the economy too. But analysts suspect the action at the end of the month will be a one-and-done, though the lack of a trade deal and further weakness abroad, especially if a no-deal Brexit sorely crimps activity, could see another easing or two.