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Back Near One Full Fed Cut From Current Levels To Year-End

STIR
  • After little initial reaction to Harker’s prepared remarks, FOMC-dated OIS is drifting lower to move nearer lows seen after weaker ISM prices paid built on the downward revisions for ULCs in Q1 and Q4.
  • He reiterated his desire to skip hiking at the June meeting whilst adding we’re at or very close to the restrictive territory point.
  • Pertinent cumulative changes from 5.08% effective: +6.5bp for Jun (-2bp on the day), +16bp for Jul to a terminal 5.24% effective (-4bp), -5bp for Nov (-5bp), -24bp for Dec (-6.5bp) and -45bp for Jan (-9bp).
  • Harker provided the last scheduled Fedspeak before the media blackout starting tomorrow at midnight, but we’d expect pop-ups after payrolls.

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