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Fed Hikes Firm A Touch More On Powell

STIR FUTURES
  • After sizeable increases on the day, FOMC-dated Fed Funds implied hikes start to give back some of the further increase on Powell’s interview which had been led by meetings further out into the year.
  • June unchanged from 53-54bp range but July sits at 105bp (104bp prior, 102bp this time yesterday), Sept at 146bps (144bp prior, 139bp yesterday) and Dec up to 199bps (197bps prior, 189bps yesterday).
  • Powell started by pulling back from last week’s interview which had left open the chances of larger than 50bp hikes, but then added that neutral rates aren’t a stopping or looking-around point and the Fed won’t hesitate to raise rates above neutral if needed.
  • There’s no need for nuanced readings of inflation reports and the NAIRU is probably well above the current 3.6% unemployment rate, whilst markets are processing the FOMC’s policy thinking “pretty well”.

Source: Bloomberg

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  • After sizeable increases on the day, FOMC-dated Fed Funds implied hikes start to give back some of the further increase on Powell’s interview which had been led by meetings further out into the year.
  • June unchanged from 53-54bp range but July sits at 105bp (104bp prior, 102bp this time yesterday), Sept at 146bps (144bp prior, 139bp yesterday) and Dec up to 199bps (197bps prior, 189bps yesterday).
  • Powell started by pulling back from last week’s interview which had left open the chances of larger than 50bp hikes, but then added that neutral rates aren’t a stopping or looking-around point and the Fed won’t hesitate to raise rates above neutral if needed.
  • There’s no need for nuanced readings of inflation reports and the NAIRU is probably well above the current 3.6% unemployment rate, whilst markets are processing the FOMC’s policy thinking “pretty well”.

Source: Bloomberg