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Fed Rate Path Treading Water

STIR
  • Fed Funds implied rates are near unchanged after a lacklustre session yesterday that helped limit the front end of the Treasury curve yesterday to exacerbate the bear steepening. With data in the driving seat, today sees various housing releases plus business and consumer surveys.
  • The terminal is still seen at 5.45% in Jan (cumulative +12bp), after which lies a cumulative 24bp of cuts to Jun’24 and 78bp of cuts to Dec’24 – see table.
  • Kashkari (’23 voter) late yesterday said he was one of 12 policymakers who pencilled in one more rate hike this year at last week’s dot plot. He added that there may be a need for higher rates for longer if the economy is too strong but there may also be a need to cut rates if real rates are tightening.
  • Ahead, Gov. Bowman (voter) gives welcoming remarks at an event on rental housing affordability with text at 1330ET. She has already implied she was the lone dot at 6.1% for end-2024.

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