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Fed Rate Path Extends Post-Data Dip On NYCB Worries

  • Fed Funds implied rates have pulled lower in reaction to NYCB highlighting material weakness following yesterday’s results. The Dec’24 implied effective rate of 4.45% is ~10bps below yesterday’s pre-data levels.
  • Cumulative cuts: 1bp May, 7bp May, 22.5bp Jun, 38bp Jul and 88bp Dec.
  • NY Fed’s Williams (voter) late yesterday didn’t add to comments from earlier in the week when he had said three cuts this year is a reasonable starting point. Goolsbee (’25 voter) meanwhile warned against overreacting to the increase in the six-month rate of core PCE inflation in yesterday’s data, whilst seeing further spillover benefits from previous supply chain normalization.
  • A busy day for Fedspeak ahead. In voting order: Waller (voter)/Logan (non-voter) discuss a QT paper at 1015ET and Kugler (voter) speaks on the dual mandate incl text at 1520ET.
  • Barkin (’24) appears on CNBC at 0830ET (he said Feb 21 that he worries that once goods deflation ends service inflation is still too high), Bostic (’24) speaks on the economic outlook and Daly (’24) is in a panel discussion.
  • Double media appearances from Goolsbee (’25).

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