The market is overly optimistic about pricing in rate cuts, and this year may end up with only a 50 basis point cut

Odaily Odaily News: Analysts said that the FOMC's July meeting minutes were too dovish, making it clear that the Fed will cut interest rates in September, which is the most information Powell can reveal in his Jackson Hole speech on Friday. This will make traders (overly) optimistic that there will be four rate cuts by the end of the year, while the Fed may only cut interest rates two or three times. We can see that the swap market is pricing in a rate cut of about 95 basis points by December, suggesting that the Fed will cut interest rates at each of the remaining three meetings this year, and suggesting that one of them will be a large rate cut. And if you pay attention to the discussions of Fed officials, you will find that this is an extremely optimistic view. The Fed is more likely to skip the November meeting to get a consensus on rate cuts, so it may only end up cutting interest rates by 50 basis points this year. (Jinshi)