🏦🇺🇸Warsh Dove Not In Sight: Cable FX Macro

• The market-implied Fed pricing curve has moved significantly hawkish over the past month. Following the June 17 FOMC meeting (Chair Kevin Warsh’s first), the CME FedWatch probabilities moved from a baseline already biased toward fewer cuts to one now pricing two 25 bp rate hikes in 2026.

• The odds of at least one hike by year-end have surged into the 85-89% range, with the biggest jumps concentrated around the September and December meetings. While the July meeting still has a heavy tilt toward a hold (around 92% chance) the odds of a 25 bp hike there have more than doubled from a month ago.

• The repricing comes alongside the removal of the prior easing bias, a dot plot with more officials penciling in higher rates, and lingering inflation concerns related to the Middle East conflict. In general, the futures curve has shifted from “higher for longer with limited easing” to “higher for longer with a clear tightening bias priced for the second half of the year”.