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Fed Rate Path Continues Measured Drift Lower Off Post-FOMC Highs

STIR
  • Fed Funds implied rates sit near unchanged for near-term meetings and price marginally more rate cuts later into 2024 overnight. The terminal is seen at 5.44% in Jan (cumulative +11bp) followed by 79bp of cuts to end-2024, with a first rate cut from current levels near fully priced for July.
  • Cumulative hikes: +4.5bp Nov (unch), +10bp Dec (unch), +11bp Jan (-0.5bp).
  • Cuts from terminal: 23.5bp to Jun’24 (from 22.5bp), 79bp to Dec’24 (from 78bp)
  • Kashkari ('23 voter) marks the sole scheduled Fedspeak today, appearing on CNBC at 0800ET. It follows his essay yesterday which saw a 60% probability of a soft landing and a 40% probability of a “high-pressure equilibrium” that could require rates going potentially significantly higher. It should see data including preliminary durable goods headline the docket.

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