Another print on the low side for the..........>

STIR: Another print on the low side for the Effective Fed Funds rate (Tuesday's

data due out shortly at 0900ET; Monday's was 0.04%) would could fuel more

speculation over an upward adjustment in the Interest Rate Paid on Excess

Reserves (IOER) at today's FOMC. 

- May Fed Funds trading at 99.9275 implying 0.0725%, 3.25bps above EFFR,

suggesting a better-than-even chance of a 5bps IOER increase. Today's EFFR print

will be eyed for the same reason: May FF futs implied ticked to 0.0775% briefly

Tuesday after the previous day's EFFR was printed.

- Ex-Fed officials interviewed by MNI's Policy team (see Apr 9 article) see an

adjustment as likely (and possibly the reverse repo rate) as the Fed attempts to

keep EFFR toward middle of the target range.

- 6 of 14 sell-side analysts who expressed an opinion on IOER said they expect

an upward adjustment at this meeting (for most others it is a close call).

- Impact of a 5bps hike would see EFFR and SOFR rise by about the same amount.

More than 5bps = likely a bearish impact on broader short-end rates.

- Note, IOER hike would be in implementation note, NOT the FOMC statement.