Nomura’s McElligott: ‘Messy’ Dollar Funding Markets May Argue For Fed ‘Power Cut’ – But There’s A Catch

Although most expect just a 25bp cut from the Fed on Wednesday, some are still in the 50bp camp. Morgan Stanley, for instance, has 50bp (with the communication shifting to "continue to monitor") as their base case. That informs the bank's call for outright longs in 2-year Treasurys. The risk, the bank says, is a 25bp cut with a reversion to the "patient" language (that combination would constitute a hawkish surprise). The Fed itself went to extraordinary lengths to walk back expectations for a