Going into the July FOMC meeting, Pinebrook’s view was that while a cut to the policy rate would be appropriate, the Fed would not do so due to institutional inertia.

While the Fed may drag its feet, markets do not.

A 25-basis point cut is a done deal for September, and markets are now assessing a 71.5% probability of a 50-basis point cut.

Odds of a 25 or 50-basis point cut in November are now 42.7% and 48%, respectively. Those odds were 8% and zero a week ago.

The market is pricing in a 33% probability of 100-basis points in cuts by year end, and a 48% percent chance of 125-basis points in cuts by calendar year end.

2025 is now pricing in 80-basis points of cuts.

**This is the noise, as it was discussed on July 9 ^{th} in the June CPI preview:**

*“Thus, we would fade the odds of a July cut and instead focus on the probabilities of either September becoming a 50-basis point cut, and/or a series of sequential cuts in September, November, and December for a total of 100-basis points”.*

-Pinebrook, July 9, 2024

**The signal is that while the Fed may now look behind the curve, this is a feature, not a bug to getting to a 50-basis point cut in September.**