BIG NUMBER
83% Probability of Fed Funds rate cut by July 31st
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WHAT IT IS
The current estimate of the likelihood that the U.S. Federal Reserve will cut interest rates by July 31st, according to data compiled by Bloomberg.

MARKET/POLICY NOTES
Markets were generally quiet in spite of a flare-up in the Middle East and massive protests in Hong Kong. There was little new on the trade front. Volatility was muted. Oil prices declined on demand concerns. Consumer spending rebounded.

HOW MARKETS REACTED
U.S. equities (S&P 500) were up +0.6% on the week, slightly ahead of emerging markets and international. Treasuries were basically unchanged; high yield spreads tightened. The market is anticipating a rate cut, but we think the Fed may wait for more definitive data on a slowdown.

WHAT THIS MEANS
We remain in an interest rate-driven market, as economic data remains mixed and investors wait on news out of this Wednesday’s Federal Reserve meeting. Event risk concerns (the Middle East, trade) remain high on investors’ radar.

WHAT TO WATCH
Wednesday’s Federal Reserve meeting and press briefing will highlight the week. The Bank of England and the Bank of Japan will also make rate decisions. Purchasing Managers Index (PMI) data is out for both the U.S. and Europe on Friday.

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