Federal Reserve’s Governor Chris Waller, known in Interest Rates trading to provoke volatility, appeared on an interview with CNBC saying that “The Fed is in position as early as July for cuts.”
Fed Funds Futures haven’t changed too much in terms of pricing of a cut (from 14% to 15% of a cut) but with such comments, expect big moves on any US Data that shows a weaker Economy.
For a reminder, the Federal Reserve has been in pause since 6 months after cutting by 50bps in December 2024 as the FED “adjusted the policy rate with the dual mandate moving in the right direction”.
Waller mentioned the waiting of an inflation shock that never happened, something that is for now pretty accurate with the past few data points.
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Waller notably mentioned high rates of unemployment for graduates and that with overall low unemployment in inflation that is in control, the Federal Reserve is well placed to cut a bit before seeing if further adjustments are warranted.
You can access the full interview right here.
The 2-Year yields have moved the most since these comments and it seems that bond markets are still trying to make sense of the dovish surprise.
The 2 Year bonds are now yielding 20 bps less than before Waller appeared.
2 Year Yield 15m Chart
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US 2 Year Yield 15m, June 20, 2025 – Source: TradingView
Dollar Index 15m Chart
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Dollar Index 15m Chart, June 20, 2025 – Source: TradingView
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