Post-LIBOR Settle Update: Flirting With 75Bp Hike?

Lead quarterly EDM2 trades weaker at 98.12 (-0.055), off overnight low of 98.085 prior to latest 3M LIBOR set' climbing to new 2-year high of 1.21371% (+0.02971), up +0.12129 for the week. Either futures had anticipated a higher benchmark settle or mkt starting to price in chance of 75bp hike in May recedes.

• Getting comfortable with pricing of three consecutive 50bp hikes: balance of Whites (EDU2-EDH3) trade -0.090-0.070 lower, while Reds (EDM3-EDH4) -0.060-0.045, Golds (EDM3-EDH7) outperforming +0.015-0.005.
• Start of price inversion holding in front Reds: Red Sep (EDU3) currently trading 96.360 vs. Red Jun (EDM3) at 96.295 -- low measure of confidence in forward policy and/or Fed managing a soft landing/avoiding recession has been priced in for months. Levels start to flatten out (dis-invert) around late Blue Mar'26/Gold Jun-26 trading around 96.96.
• Thursday derivatives roundup: Rate hike insurance/put buying gained momentum as rates sold off consistently, yld curves bear flattened after brief steepening period in first half as bonds extended lows (30YY taps 2.9845% high). Curve flattening resumed as inflation expectations climbed.
  
• Put buying strong with short end prices in more hikes. Fed Chairman Powell comments, while hawkish, not exceedingly so as he intimated 50bp is on the table for May 4 FOMC. Markets pricing in two additional 50 bps through June and July meetings.
• Salient trade included buy of 10,000 Sep Eurodollar 96.50/96.75/97.00 put flys w/ Dec 96.12/96.37/96.62 put flys, 6.5 total on the package. In SOFR options, paper bought 15,000 SFRU2 97.06/97.43/97.81 put flys 2.25 over 98.37 calls.