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Fed Rate Path Undeterred By RBA Hold

  • Fed Funds implied rates remain steadfast for 2023 meetings, with no impact from the RBA holding vs a hike on balance expected by analysts but only circa 35% priced, although soften slightly into 2024 weighed by a weaker China Caixin PMI.
  • Cumulative hike from 5.33% effective: +4.5bp Sep (unch on the day), +9bp Nov to terminal 5.42% (unch)
  • Cuts from Nov terminal: 4bp to Dec’23 (unch), 55bp to Jun’24 (from 53.5bp) and 126bp to Dec’24 (from 125bp).
  • Goolsbee (’23 voter) gives welcoming remarks after yesterday’s dovish remarks (“fabulous news” to see inflation coming down, monthly readings coming in “quite good”, some progress in service inflation has been a “nice bonus”).

Source: Bloomberg

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