Rates Spark: Things Are Lining Up For The Doves

2025-06-27 03:40:00 ET

By Michiel Tukker

Earlier Fed cuts could have dovish spillovers to the eurozone

The dovish vibe in US rates markets may be fuelled further by Friday’s personal spending and PCE inflation data. The core PCE is likely to be just 0.1% month-on-month, which would by itself support a cut as early as next month. Of course, the fear of tariff-related inflation is not yet over. But if the personal spending numbers from May show significant weakening on the back of worsening consumer sentiment, then markets should be willing to increase the chance of a July cut. Right now, the probability already stands at around 25%, and with payroll numbers next week, a lot can still happen....

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