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Heading into the July 31 FOMC meeting, there was a substantial 22% chance of a 50 basis point cut. Odds of a 50 basis point cut hit 50% at one point.

That speculation ended, for now, when Fed Chair Jerome Powell labeled the rate cut a "Mid-Cycle" Adjustment

In response, the yield curve inverted more, then more still on poor economic data.

Despite a Global Manufacturing Recession made worse by Trump's China tariffs and despite a Bond Market Screaming for More Rate Cuts, traders believe the Fed will take baby steps.

Rate Hike Odds For December

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Curiously, traders believe odds of a double cut and no cut are about equally likely.

One side is very wrong most likely, it's those who believe no more cuts.

Eventually the Fed will panic, and I suspect by the end of the year.

Mike "Mish" Shedlock