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Fed Hikes Tread Water Ahead Of Powell, Retail Sales

STIR FUTURES
  • Fed Funds implied hikes are largely where they started the US session with 53.5bps for Jun, a cumulative 102bps for July and 190bps to year-end.
  • A soft Empire manufacturing survey unwound strength earlier in the session largely stemming from ECB rate expectations. Price components came off highs (record highs in the case of current prices paid) but remain very elevated and are hindering broader activity, including shipments falling at the fastest pace since early in the pandemic and a seven-month low in capex intentions.
  • Fedspeak broadly kept to recent comments, with Williams (voter) supporting 50bp hikes at upcoming meetings and Mester (’22 voter) repeating that she see personally sees having to take rates above neutral and supports 2x50bp hikes before reassessing whether a more aggressive pace is required.
  • Powell the pick tomorrow with a WSJ interview at 1400ET plus five other FOMC members including two ’22 voters (Bullard and Mester again).

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

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  • Fed Funds implied hikes are largely where they started the US session with 53.5bps for Jun, a cumulative 102bps for July and 190bps to year-end.
  • A soft Empire manufacturing survey unwound strength earlier in the session largely stemming from ECB rate expectations. Price components came off highs (record highs in the case of current prices paid) but remain very elevated and are hindering broader activity, including shipments falling at the fastest pace since early in the pandemic and a seven-month low in capex intentions.
  • Fedspeak broadly kept to recent comments, with Williams (voter) supporting 50bp hikes at upcoming meetings and Mester (’22 voter) repeating that she see personally sees having to take rates above neutral and supports 2x50bp hikes before reassessing whether a more aggressive pace is required.
  • Powell the pick tomorrow with a WSJ interview at 1400ET plus five other FOMC members including two ’22 voters (Bullard and Mester again).

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