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Fed Cut Expectations Fall Further On Strong Retail Sales

STIR
  • The clearly stronger than expected retail sales data have helped push cut expectations back close to the lows seen after the hawkish FOMC dot plot from its Sep 20 decision.
  • Cumulative hikes from 5.33% effective: +3bp for Nov (+1bp on the day), +11.5bp for Dec (+2bp) and +13.5bp for Jan to 5.46% terminal (+3.5bp).
  • Cuts from terminal: 25bp to Jun’24 and 73bp to Dec’24. The latter getting closer to the 71bp seen at the close after the FOMC on Sep 20.
  • Fedspeak: Gov Bowman up next but the topic of innovation in payments could limit mon pol discussion, with Barkin (’24 voter) following on the economic outlook at 1045ET.

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