What Will Chairman Powell Say Later Wednesday?

• Wednesday afternoon's press conference following the conclusion of the FOMC meeting is expected to be Jerome Powell's last as Fed Chairman. 

• The expectation is for Mr. Powell to continue to talk about how the Fed is focused on US employment and inflation. 

• The Fed fund futures forward curve is showing us no rate change should be expected for the next year and a half, though the reality is the new Fed Chair will likely be forced to make a move, or be immediately replaced. 

Later today, Wednesday, April 29, US Fed Chairman Powell will step to the microphone and announce no change to the Fed fund rate, leaving it between 3.5% and 3.75%. The subsequent press conference will see Mr. Powell again focus on US employment and inflation, while questions pour in about his relationship with the US president and his replacement that will likely have taken the reins by the time the next FOMC meeting rolls around on June 16.

For now, let’s focus on what the market is telling us about potential rate changes. As usual, we’ll start with the Fed fund futures forward curve by walking through the calculations based on the price of futures contracts (1% - Futures Price = Expected Rate)

• April at 96.36 = 3.64%
• May at 96.36 = 3.64%
• June at 96.35 = 3.65%
• July at 96.37 = 3.63%
• August at 96.38 = 3.62%
• September at 96.39 = 3.61%
• October at 96.39 = 3.61%
• November at 96.39 = 3.61%
• December at 96.40 = 3.6%
• January 2027 at 96.40 = 3.6%
• February 2027 at 96.39 = 3.61%
• March 2027 at 96.38 = 3.62%
• April 2027 at 96.38 = 3.62%
• May 2027 at 96.37 = 3.63%
• June 2027 at 96.39 = 3.61%
• July 2027 at 96.39 = 3.61%
• August 2027 at 96.4 = 3.6%

To summarize, as we can see, futures contracts are priced between 96.5 and 96.25 from the expiring April 2026 issue (ZQJ26) through at least the August 2027 contract (ZQQ27). Based on this chart, the Fed fund futures market is telling us a couple possible things:

• No rate change is expected for the next year and a half (roughly); or more likely
• The market has no idea what is going to happen when the US president’s nominee is confirmed as Chair

My Blink reaction has been and continues to be this forward curve will see a definitive change between late April and mid-June, when the next meeting begins with a new Chairman. As the months roll by, the debate over The Economy will continue, again based on partisan politics rather than economic analysis. 

Stay tuned.