Fed funds futures are lower after the hawkish comments
Fed funds futures are lower after the hawkish comments from the Fed's George and Harker. George votes this year and she dissented against the rate cut, and added she doesn't think the economy needs further stimulus. Harker votes next year and said he "reluctantly" supported the action, but it doesn't sound that he'd lean that way next month, and it looks as if he'd support a steady stance when he votes in 2020, ceteris paribus. The shift in sentiment has seen expectations for a September easing erode slightly, such that the implied rate is no longer fully priced for a 25 bp reduction, with the potential for 50 bps erased. In fact, it's now the case the market reflects slightly less than the 100% chance for a quarter point. Meanwhile, the long end of the curve is now only suggests about 58 bps in cuts by the end of January, down from nearly 75 bps at the height of the market Fed-cut mania. Analysts still look for a September easing based on the FOMC's excuses about weaker conditions abroad and low inflation.