Can the market bully the Fed into another decision this time around?
A 25 bps rate cut is basically a done deal at this point. The real question is, will the Fed cut rates by 50 bps instead in two weeks' time?
As of yesterday, those odds sat around ~54% but they have jumped up to ~71% now. Typically, when Fed funds futures behave this way and once we cross the threshold of around 75% to 80%, the Fed has always caved and gave in to the market pricing.
Hence, the pricing in the rates market over the next two weeks is going to be something that traders have to watch closely. This is arguably one of the reasons why the dollar is largely struggling today despite the risk-off mood as well.
