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Fed Implied Rates Tread Water With Tomorrow’s FOMC Eyed

STIR
  • Fed Funds implied rates consolidate yesterday’s modest increase, with only housing data on the docket today ahead of tomorrow’s FOMC. It prices almost 50/50 probability of another hike whilst end-2024 rates have recently shifted almost exactly to the June dot ahead of tomorrow’s fresh dot plot.
  • Cumulative hikes from 5.33% effective: 0bp for tomorrow, +8bp for Nov and +11bp in Dec for a terminal 5.44%.
  • Cuts from terminal: 28bp to Jun’24 and 88bp to Dec’24 – both at recent lows – with the first cut from current levels still priced for the Jul’24 meeting.
  • The UAW has said more of its members will go on strike at General Motors, Ford and Stellantis starting Friday noon unless "serious progress" is made toward new labor contracts.

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