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Fed 2023 Rate Expectations Drift Higher

STIR FUTURES
  • Fed Funds implied hikes keep yesterday’s climb to 70bp for Nov but drift higher further out: 4.26% for Dec’22 (+1.5bp), terminal 4.49% Mar’23 (+2.5bp) and 4.17% Dec’23 (+6bp).
  • Contrary to the RBA slowing to a 25bp hike on Tue, the RBNZ overnight kept to 50bps with no signal of an imminent slowdown, albeit with limited immediate impact on Fed expectations.
  • Kashkari (’23 voter) speaks in moderated Q&A at 0915ET before Bostic (’24) discusses inflation including text late on. Kashkari said Sep 27 that must not make the mistake of easing policy prematurely, at a time when terminal pricing was a little over 4.6% and Dec’23 ~4.4%.

FOMC-dated Fed Funds implied ratesSource: Bloomberg

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