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Fed Rates Give Back BoC Increases On Initial Claims Rise

US DATA
  • The sharp jump in weekly initial claims weighs on Fed rates, unwinding most of yesterday’s BoC boost on near-term pricing and more than reversing the increase for later meetings.
  • Pertinent cumulative changes: +7bp Jun (-1bp on the day), +19bp Jul (-0.5bp), -10bp Dec (-2.5bp). The 30bps of cuts from terminal to year-end compares with nearer 25bps pre-data.
  • Moves have however been retraced slightly and might see more of that ahead, with potential seasonality distortions plus a particularly large contribution from Ohio.

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