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Fed Rate Path Maintains Post-PPI Decline Whilst Stocks Extend Gains

STIR FUTURES
  • S&P E-mini keeps pushing new session highs (+1.2%) but it’s not led by any further softening in Fed rate expectations, at least not in recent hours.
  • There is still a 17.5bp hike priced for the May 3 FOMC, and having dipped circa 5bps after PPI (and less so claims) earlier, the year-end rate of 4.31% is -1bp on the day with an implied 52bps of cuts from current levels.
  • September sees a little more than 50% chance of a cut from here (-15bps) with the first cut fully priced for Nov (-34bps), unchanged and -1bp on the day respectively.

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