Friedberg @ 00:11:15Right
economymarkets
Interest rate futures markets are implying that by December 31, 2024, the Federal Reserve will have cut the federal funds rate by a cumulative 75 basis points with roughly 100% implied probability, and by 100 basis points with roughly 70% implied probability.
So now with inflation kind of supposedly approaching 2% and unemployment over 4%, the market, if you look at the trading markets, they are now estimating a 100% chance of a three quarter of a percent rate cut by the end of 2024 and a 70% chance of a one point rate cut by the end of 2024.
Explanation
Contemporaneous writeups of the CME FedWatch Tool for the week ending around August 23, 2024 show that futures markets were indeed pricing very high odds of substantial 2024 cuts:
- An India Infoline summary of CME FedWatch probabilities for the week to August 23, 2024 notes that by December 2024 there was a 100% implied probability of at least 75 bps of rate cuts and about a 64.3% probability of 100 bps of cuts.【1†turn1search0】
- A related piece summarizing CME FedWatch around mid‑August 2024 reports essentially the same structure: 100% probability of 75 bps and roughly 63% probability of 100 bps of cuts by December 2024.【1†turn1search2】
Friedberg’s claim that “trading markets … are now estimating a 100% chance of a three quarter of a percent rate cut by the end of 2024 and a 70% chance of a one point rate cut” is therefore an accurate, rounded description of those CME FedWatch probabilities (100% vs. 100%, and ~64% vs. “roughly 70%”).
Since the normalized prediction is explicitly about what interest rate futures markets were implying at that time, and that implication matches independent summaries of the CME FedWatch data, the statement is best classified as right.