|Yesterday, NY fed president John Williams gave a speech that got the market convinced a 50bps rate cut was coming on the next meeting.|
Today St. louis fed president James Bullard said, nope just 25bps.
Bullard on rates
Would like to cut by 25 bps (not 50 bps)A 25 bps cut would give the Fed optionality for later in the yearToo-slow inflation response would be reason to cut further, along with worse outcomes on trade war
Rate cut now would be pre-emptiveNo need to revisit timing on balance sheet runoffWants to see upward-sloping yield curveFed not on a pre-set courseIt would be difficult for the Fed not to ease July 31 at this point
So the market acts like a chicken with its head cut off.