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Evans Builds On Fedspeak Above Market Terminal Rate

FED
  • Chicago Fed’s Evans (’23 voter but retiring in early 23) notes that a 50bp hike in Sept is a reasonable assessment but equally a 75bp “could also be okay”, hopeful that 25bp hikes after Sep still reasonable to get a 3.25-3.5% funds rate by year-end whilst seeing a 3.75-4% Funds rate by 2Q23 as sufficiently high.
  • That compares with current market pricing for a 58bp hike in Sept, a cumulative 102bps to an implied 3.35% at the Dec FOMC with a peak of 3.38% in Feb'23 before 50bp of cuts thereafter through 2023 (having unwound from closer to 60bps of cuts from early this morning).
  • Fedspeak attention next turns to '22 voters with Mester (1300ET) and Bullard (1845ET).

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