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Market Still Thinks Rate Cut Likely Despite “Strong” US Jobs Report

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

Despite Friday’s “strong” job report of 224,000 jobs added to the US economy and speculation that The Federal Reserve may actually NOT cuts rates at the next FOMC meeting, the Fed Funds futures market is still signaling an upcoming rate cut.

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And the expected path of Fed rate cuts (orange dashed line) is still downward sloping,

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The US dollar swaps curve, the OIS curve and the swaps SPREAD curve are all sagging at the short-end.

swapthing

The interest rate volatility cube is still spiked at the short end (according to swaptions).

swaption

Let’s see if things change by Monday afternoon (my class meets at 4:30 PM EST).

 

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