You know what its like, your analysis is telling you one thing but you go all like 'Nah, that won't happen' …
Bank of America / Merrill Lynch research, cites the historical slope of the 1 month to 6 month Fed Funds futures
- history of this spread back to 1989 suggests the market has never priced an amount of inversion equal to today's levels without the Fed cutting
- suggests Fed could be cutting in a month
- Fed typically cuts 50bps in the first month of an easing cycle
And then the 'but, no':
- Fed would only consider easing in current environment to combat a slowdown
- Fed has generally pushed back against idea of a pre-emptive cut to support inflation
- Fed most likely to cut in September
