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Fed Rate Path Consolidates Sizeable Push Higher

STIR
  • Fed Funds implied rates consolidate yesterday’s push higher in a continuation of the hawkish reaction to payrolls.
  • Cumulative cuts: 5bp for Mar, 20bp for May, 40bp for Jun and 116bp for Dec.
  • Fedspeak fills an otherwise light docket:
  • Mester (’24 voter retiring June) starts on the economic outlook at 1200ET (text + Q&A) – she last spoke Jan 11 saying March probably too early for a cut, policy in good place, focusing on balancing both sides of mandate this year.
  • Kashkari (non-voter) in moderated discussion at 1300ET – he wrote in an essay yesterday that the Fed has time to assess economic data before cutting rates, with the neutral rate possibly higher now.
  • Collins (’25 voter) gives opening remarks at labor market conference at 1400ET – a rare appearance as she last spoke in mid-November.

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