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Fed Rate Expectations Slip Further On Mixed US Data

STIR FUTURES
  • Fed Funds implied rates have continued to press lower in the time since the mixed 1000ET US data with weaker consumer confidence & Richmond Fed mfg but stronger new home sales.
  • 21bp hike for next week’s FOMC (-1.5bp) and a cumulative 25bp hike for Jun (-2bp), which is now seen fully reversed with Sep before 21bps of cuts from current levels to 4.62% Nov (-6.5bp on the day, -14bp from Fri close) and 42bps of cuts from current to 4.41% Dec (-7.5bp on the day, -17bp from Fri close).
  • The declines show an eagerness to pick up on softer elements of data, building on a slip late yesterday after First Republic's Q1 earnings saw a resurgence of regional banking uncertainty with larger than expected deposit flight for Q1.

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