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Fed Rate Path Holds Climb On Debt Limit Optimism

STIR FUTURES
  • Fed Funds implied rates hold near yesterday’s highs after a sizeable lift following the US open which continued with debt ceiling resolution hopes after separate Biden and McCarthy comments.
  • Cumulative change from 5.08% effective: +5.5bp Jun, +1.5bp Jul, -11.5bp Sep, -31bp Nov, -53bp Dec and -75bp Jan (all +0.5-1bp higher on the day). The Dec’23 rate of 4.55% is at highs since May 2.
  • Fedspeak: Vice Chair nominee Jefferson discusses the economic outlook (just text) at 0905ET and Logan (’23 voter) speaks at the Texas Bankers Association (text, Q&A) at 1000ET. VC Supervision Barr lands in the middle at 0930ET at the Senate leg of banking hearings. Jefferson last spoke May 13 noting that inflation is still high with ‘mixed’ news this year and that tighter credit will only have a mild effect on growth.


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