Mitsubishi UFJ Warns Against Over-Interpreting Fed Minutes; July Rate-Hike Odds Priced Too High at 30%

Derek Halpenny from Mitsubishi UFJ advised against over-reading details in the Federal Reserve's June FOMC meeting minutes set to be released tonight (July 8), citing significantly changed market conditions since early June. The dot plot, likely submitted before June 12, would not show nine members supporting a rate hike if conducted today, he noted. Current overnight index swaps price July 29 rate-hike odds at near 30%, which appears too high given weakening labor data. For the period through March 2027, markets price in nearly 40 basis points of rate hikes, though Halpenny believes rate cuts are more likely by then.
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