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Another Sizeable Trimming Of 2H23 Rate Cuts

STIR FUTURES
  • Fed Funds implied hikes have cooled from intraday highs but have still seen a significant further pushing higher after Friday’s payrolls/ISM boost despite few new drivers.
  • 24.5bp priced for Mar 22 (+1.5bp on the day) and a second 25bp hike in May is increasingly eyed (cumulative 43bp, +3.5bp).
  • Larger moves further out with the terminal now seen straddling June/July meetings with a cumulative 52bps of hikes to 5.10/5.11% (+8/10bp).
  • The Dec’23 rate jumps to 4.78% (+15.5bp) as 2H23 rate cuts are trimmed to 33bps from 50bps pre-payrolls and 40bps with yesterday’s close.

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