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According to CME Fedwatch the odds of a rate cut in March jumped to 96.3% today from 8.9% a week ago.

Looking ahead to December, it's highly likely at least two additional cuts are on the way.

December Rate Cut Probabilities

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December Implied Rate Cuts Probabilities vs Current FF Rate

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  • At Least 2 Cuts: 96%
  • At Least 3 Cuts: 77%
  • At Least 4 Cuts: 40.6%

What's Happening?

  1. Feb 19: Fed Minutes Highlight Coronavirus Concerns and Uncertainty 8 Times
  2. Feb 24: Bond Yields Crash and Gold Soars on Pandemic Threat
  3. Feb 25: CDC Admits Spread of Coronavirus in the US Appears Inevitable
  4. Feb 25: Lie of the Day: This is Not a Pandemic
  5. Feb 25: Nearly 50% Odds of "At Least" 3 Rate Cuts by December
  6. Feb 26: Trump says We are "Very, Very Ready for the Coronavirus, for Anything"
  7. Feb 27: Useless Act: California Monitors 8,400 People for Coronavirus; 33 Test Positive
  8. Feb 27: Containment Fails: Coronavirus Tweets of the Day

Rate cuts odds started rising before coronavirus threat materialized on news Largest Global Shipping Decline Since 2009.

Mike "Mish" Shedlock