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September Rate-cut bets on the rise, but Macquarie maintains outlook for no cuts -- Bets on the Federal Reserve cutting rates by September rate have been revived by recent data suggesting disinflation is back on track, but Macquarie continues its call for no cuts this year flagging a core goods a key upside risk to inflation.

"Our baseline for FOMC policy remains unchanged from last month, Macquarie said in a recent note. "We suspect rate cuts will only commence in 2025 when there is greater scope for YoY core PCE inflation to appear to be tracking back towards 2%."

Last week data showed that year-on-year core personal consumption expenditures price index, or core PCE, the Fed's preferred gauge of inflation, remained steady a 2.8% in April from a month earlier. Slowing prices in core services, excluding houses, was one of the major highlights of the report as the measure slowed to a 0.27% pace, driven by a cooling in air transportation.

But core goods prices rose 0.1% in April from March, marking the third consecutive monthly increase and suggesting that the trend of slowing goods prices has "bottomed and appears to be firming," Macquarie said, falling it as an upside risk to the inflation outlook.


In the coming months, the firming of core goods prices may "come to fruition," Macquarie added, flagging a jump in freight rates and a potential resurgence in used car prices after wholesale prices rose in May for the first time since September.

Beyond inflation, however, Macquarie like the Fed, is keeping a close eye on the labor market as unexpected weakening could well force the Fed to pivot.

"Should the labor market weaken more than is desirable (and more than we anticipate) this could prompt earlier FOMC action," Macquarie said.

Ahead of the Fed meeting next week, the monthly non-farm payrolls due will take on added importance following recent data, released Tuesday, showing job openings, a measure of demand for workers, dropped to a three-year low.

The odds of a rate cut in September jumped to 55% from 44.9% last week, according to's Fed Rate Monitor tool.

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