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2H23 Fed Rates Lifted Further, Heavy Data Slate Tomorrow

STIR FUTURES
  • Fed Funds implied rates have seen a second wind over the past 75mins, especially in 2H23 for now sizeable increases on the day.
  • 22.5bp hike for the Wed FOMC (+2.5bp on the day), a cumulative 29bp hike for May (+4.5bp).
  • Only around half of a potential hike is now seen being unwound for Sep and showing just 8.5bp of cuts from current levels to 4.75% for Nov (+12.5bp) and 30bp of cuts to 4.53% for Dec (+13.5bp).
  • Tomorrow sees i) monthly core PCE inflation for March and how today’s upwards surprise in Q1 was distributed across the quarter (although still the strongest quarter since 1Q22), ii) the eagerly anticipated ECI for Q1, iii) the MNI Chicago PMI and iv) the finalized U.Mich consumer survey after the surprise surge in near-term expectations in the preliminary report (all after potential spillover from European regional CPI and advance GDP).

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