The very good May inflation report was followed by an even better June inflation report, such that—if not for the unfortunate shift to a single rate cut in the June FOMC Summary of Economic Projections—a July cut might be a live possibility. As things stand, the market is now fully pricing a first cut in September and looking for nearly 2.5 cuts before year end. We had long favored June or July as the start of the cutting cycle, partly because beginning to ease right before the election is not ideal. However, if the choice is between September and November, the unemployment rate at 4.1% says “do not delay”.
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