Market pricing for a Fed cut at the June 12 meeting has fallen to 62% and there are only 74 bps of cuts priced in. There's a rising chance that next week's Fed dots will show just 50 bps in cuts as the median.
Here's a good chart from Bank of America showing why. It looks ahead to where year-over-year US CPI will be in June given monthly rises of 0.1% to 0.4%. There's no path in that scenario that gets particularly close to 2% and continued +0.3% readings would leave the measure at 3.6% -- surely too hot for the Fed to start cutting.
Moreover, given the recent rise in oil and gasoline prices, the odds fall further.
