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Fed Implied Rates Near Post-JOLTS Lows

  • Fed Funds implied rates are unchanged overnight for Sep and Nov meetings and otherwise drift lower helped by ECB speak and EZ CPI but keep within yesterday’s range. The terminal 5.45% with Nov remains 5.5bp lower than pre-JOLTS levels whilst 2H24 implied rates are at least 20bps lower.
  • Cumulative hikes: +3bp for Sep, +12bp for Nov to 5.45% terminal.
  • Cuts from Nov terminal: 2.5bp to Dec (from 2bp yesterday), 50bp to Jun’24 (from 48bp) and 122bp (from 120bp).
  • Atlanta Fed’s Bostic (’24 voter) reiterated his view that monetary policy is already restrictive enough to get inflation on track toward 2% whilst stressing that he doesn't see the need for easing any time soon. Recall that whilst separate to Bostic's vote as President for the Fed Funds target range, the Atlanta Fed Board was in favour of holding the discount rate unchanged in July.
  • Collins (non-voter) is next up at 0900ET although remarks don’t sound mon pol-focused. She said Aug 24 that may need additional increments or may be near the hold point and that whilst it’s “not helpful” to map out a preset path for on rates, it’s extremely likely the Fed has to hold for some time.

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