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Fed Hikes Firm With Spillover From UK CPI Beat

STIR FUTURES
  • Fed Funds implied hikes have firmed this morning, helped by a sizeable beat in UK inflation with double digit CPI adding to yesterday’s firming in Canadian core CPI even if headline cooled as expected. There was no immediate impact overnight from an expected 50bp RBNZ hike to 3% whilst seeing rates peak with a 4 handle.
  • Sitting with 64bp for the Sept FOMC, a cumulative 121bp for Dec and 137bp to a peak of 3.70% in Mar’23 with just over 40bps of cuts to end-2023. The terminal rate has more than retraced the hit from last week’s CPI even if pricing for September still hasn’t.
  • Ahead, FOMC minutes plus Governor Bowman either side on technology & financial services and Covid & women’s role in the economy, both with text and Q&A.

Cumulative hikes implied by FOMC-dated Fed Funds futuresSource: Bloomberg

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  • Fed Funds implied hikes have firmed this morning, helped by a sizeable beat in UK inflation with double digit CPI adding to yesterday’s firming in Canadian core CPI even if headline cooled as expected. There was no immediate impact overnight from an expected 50bp RBNZ hike to 3% whilst seeing rates peak with a 4 handle.
  • Sitting with 64bp for the Sept FOMC, a cumulative 121bp for Dec and 137bp to a peak of 3.70% in Mar’23 with just over 40bps of cuts to end-2023. The terminal rate has more than retraced the hit from last week’s CPI even if pricing for September still hasn’t.
  • Ahead, FOMC minutes plus Governor Bowman either side on technology & financial services and Covid & women’s role in the economy, both with text and Q&A.

Cumulative hikes implied by FOMC-dated Fed Funds futuresSource: Bloomberg