BlackRock’s Fawcett sees Fed rate cuts unlikely before December

Nicholas Fawcett from BlackRock signaled that further Fed rate cuts are unlikely. The probability for a 25 bps cut after the April meeting sits at 0% YES.

Fawcett’s comments match futures markets, which show no rate cut fully priced until December. The odds for a 50+ bps cut after April also sit at 0% YES. The April meeting’s market is unchanged, with traders skeptical about significant cuts amid geopolitical tensions and persistent inflation.

Liquidity in the 25 bps market is decent, with $9,464 in USDC traded daily. But it takes just $2,075 to move the price 5 points, which means a single large trade could shift the odds. The 50+ bps market is harder to move at $13,259 needed for the same shift, a sign that traders are confident no major cuts are coming.

Fawcett pointed to energy price spikes and ongoing inflation as factors putting the Fed in a tight spot. At less than a penny, buying YES for a rate cut after the April meeting offers a theoretical 100x return, but the underlying conditions make that a lottery ticket at best.

Watch for any indications from Powell or incoming Fed leadership about future rate cuts. The next CPI release and geopolitical developments in the Middle East could also move the odds.

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