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Fed Rate Expectations Shrug Off Potential Dovish Drivers Pre CPI

STIR FUTURES
  • Fed Funds implied hikes have seen little change through the US session: 31.5bp hike for Feb 1 (+0.5bp), cumulative 50.5bp to 4.84% Mar (unch), terminal 4.94% Jun (+0.5bp) and 4.44% Dec (-2bp).
  • Coming ahead of CPI, there was little impact from Boston Fed’s Collins (non-voter) leaning to a 25bp hike for the Feb meeting as part of 3x25bp hikes left to increase flexibility, nor from ECB end-2023 OIS-implied rates falling 10bps on a MNI sources piece looking at smaller ECB rate hikes.
  • Pricing has broadly speaking moved sideways since the payrolls/ISM hit tilted towards a 25bp hike for Feb and lowered the terminal by 10bps.

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