Authored by Matthew Hornbach, head of interest rate strategy at Morgan Stanley
The Fed won’t be enjoying a lazy summer this year. Chair Powell has teed up monetary policy easing at the conclusion of the FOMC meeting on July 31. The consensus expectation among economists calls for a 25bp cut in the target interest rate, while we expect the Fed to deliver 50bp. The market is pricing an outcome somewhere in between, with fed funds futures implying around 30bp.
The debate over the size/cost of an…
