The rate path nobody is positioned for

Forward curves still price two cuts into the back half of the year. We think the market is anchored to a narrative the data has quietly abandoned.

The forward curve is a confession dressed as a prediction. Right now it confesses comfort: two cuts penciled into the back half of the year, an economy gliding toward target, a central bank that has the luxury of patience. We read the same data and see a different posture entirely.

Three things have shifted under the surface while the headline narrative held still. Wage growth has stopped decelerating. Goods disinflation, the gift that carried the entire disinflation story, has largely been spent. And the labour market, far from cracking, keeps absorbing supply without loosening. None of these are dramatic on their own. Together they describe an economy with more underlying momentum than the rate path allows for.

The point is not to predict the next meeting. It is to notice when the distribution of outcomes has quietly become lopsided. When the market prices one path with conviction, the cost of being early to the other path collapses. That asymmetry, not the forecast, is the trade.

We are not positioned for a particular number. We are positioned for the moment the consensus discovers it was anchored to a story the data had already left behind.

Consensus is not a forecast. It is a crowd standing in the same place, and crowds are easiest to move when they are most comfortable.