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Fed Hike Expectations Firm Ahead Of Payrolls

STIR FUTURES
  • Fed hike expectations have firmed further in a move kickstarted in late US hours, back pricing 210bps of hikes to come this year and more than fully pricing a shift to 2.25-2.5%.
  • Pricing for May holds at the 44 +/-1bp range seen this week as it awaits a catalyst, potentially NFP later.
  • Chicago Fed’s Evans (2023 voter) speaks afterwards at 0905ET on the economy and monetary policy, with text and Q&A from both the audience and media.
  • He said on Mar 24 that he was in line with the median dot for 175bps of tightening in 2022 (to 1.75-2.0%) and was comfortable with 25bps each meeting but open minded to a 50bp hike if it helps. Since then, Dec’22 Fed Funds pricing has increased 20bps with a similar increase in 2Y Tsys, whilst 10Y yields are largely unchanged.

FOMC-dated Fed Funds cumulative pricing for meetingsSource: Bloomberg

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