MUFG analyst Derek Halpenny said the Fed will release minutes from the June FOMC
tonight but warned against over-interpreting details because the pre-June
meeting backdrop differs materially from today. The FOMC dot plot was likely
compiled in the week to June 12 and would not reflect a hypothetical meeting
held now — in particular it would not show nine participants favoring hikes. On
that basis he says Overnight Index Swap pricing for further hikes looks rich.
The market still prices roughly a 30% chance of a July 29 rate hike; given
recent softening in labor-market data, Halpenny views that as too high. By March
2027 the market has priced nearly 40bp of tightening, but MUFG expects cuts are
more likely than additional hikes by then.
