The ceasefire does little to change the market perception that a rate cut this month is still on the table
Fed fund futures show that odds of a rate cut this month stand at ~73%, not significantly changed after the US and China reached a trade deal "lite" at the end of last week.
Despite Trump flaunting the deal as being a "tremendous" one, it's hard to get too excited as China's only firm commitments continue to just be agricultural purchases.
Unless they put pen to paper, China's other concessions appear to be more vague with promises to be more "transparent" about currency intervention, IP protection and the opening up of its financial sector.
In return, suspension of the December tariffs even appear to be in doubt as Trump fears China may not follow through to enforce the above yet again.
The lack of change in the odds above show that markets aren't overly enthusiastic and excited about the trade truce but it certainly beats any further escalation in the mean time.
There will be a host of Fed speakers due this week (starting from tomorrow) so they will have just about four days to try and walk back expectations before the blackout period begins at the end of this week - if they view that the trade truce is reason enough to do so.
