🏦❗️Cable FX Macro Weekly Note: FOMC September Meeting

**As seen in Risk In The Week report 09/15/23, subscribe at cablefxm.co.uk/reports

Back in late July, the Fed lifted its benchmark by 25bps to the 5.25%-5.50% target range, this was expected by the majority of economists. The FOMC said that it will continue to assess additional information while it considers the extent of firming to curb inflation. Over the presser, Powell said the Fed will take a data-dependent approach to future hikes and flagged that it was possible for the FOMC to raise or hold rates in September. Also, Powell mentioned that Fed staff forecasts no longer project a recession, this caught some attention and supported ‘soft-landing’ calls. Since the meeting, we have heard similar remarks from Powell during his Jackson Hole speech. At the same time, Powell left the door open for further tightening, this has markets pricing a November rate hike, however, the probability is close to 50%. SOFR futures calendar spreads price in around 100bps of easing for next year, this is 50bps less than what we saw for most of the summer. The desk at J.P. Morgan sees no further rate increments this cycle, while Citi has pushed its call for a hike to November as they see the median plot for 2023 unchanged. Barclays sees a hike in November and the Fed announcing fewer rate cuts for 2024 at next week’s meeting. Both Citi and Barclays recommend being short 2-year Treasuries.