A reader asked if I still thought there would be a rate cut in July.

The short answer is yes.

CME Fedwatch shows the odds of a 50 basis cut declined from 29.2% to 4.9% but I never thought there would be a 50 basis point cut in the first place.

The long answer is the odds need to drop to the 50-60% area before there is a reasonable chance of no cut. If the odds drop under 50% then the Fed likely will not cut.

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What happens depends on economic reports between now and July 31.

One good jobs report (see Job Growth +224,000 Tops Expectations, Wage Growth Disappoints), did not change my expectations at all given that I never forecast two cuts.

The yield on the 10-year Treasury note is barely back above 2%, 2.04% to be precise.

Futures suggest there is a 100% likelihood of a cut, but realistically, it's about 90% now, down from 95%.

Mike "Mish" Shedlock

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A month ago, Fed Fund Futures implied a 72.9% chance of at least one hike. They now imply a 38.9% chance of at least one

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The market has given the Fed a free swing as rate cut odds dip to 47%.

Nearly 50% Odds of "At Least" 3 Rate Cuts by December

In the last month the odds of interest rates cuts by the Fed have soared.

Rate Cut Odds Shrink Dramatically Following FOMC Decision

The odds the Fed Funds Rate would be 1.75% to 2.00% fell from 54.2% yesterday to 0% today.

Yield Curve Still Inverted Despite Fed Rate Cut

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