The Federal Reserve interest rate decision is at 2 pm ET and the chances of any move on the 3.50-3.75% Fed funds rate is nearly nil.

Looking further out, the market is seeing less of a chance of rate cuts than it did a few weeks ago, and that’s despite worsening employment. The market had priced in more than 60 bps in easing this year but that’s dwindled.

Pricing in Fed funds futures now shows:

• 0.2 bps of easing in April (0.8% chance of a cut)

• 3.7 bps of easing in June (14.8% chance of a cut)

• 7.7 bps of easing in July (30.8% chance of a cut)

• 12.0 bps of easing in September (48.0% chance of a cut)

• 14.5 bps of easing in October (58.0% chance of a cut)

• 20.5 bps of easing in December (82.0% chance of a cut)

• 21.2 bps of easing in January 2027 (84.8% chance of a cut)

• 23.5 bps of easing in March 2027 (94.0% chance of a cut)

• 24.2 bps of easing in April 2027 (96.8% chance of a cut)

As you can see, through April of next year there still isn’t a cut fully priced in and the chances don’t rise above 50% until October. Much of how that develops will depend on what will happen in the war in Iran.

Today, WTI crude oil is up $1.93 to $98.15 per barrel and Brent is up $5.22 to $108.64. The divergence in WTI-brent suggests a growing chance that the US limits oil exports, which is something that would cause a political crisis.

Today’s PPI data for February underscored the problem the Fed faces, input costs were rising even before the Iran war began. That’s sure to spike in the March data and beyond that depends on what happens in Iran.