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Fed Rates Path Marginally Off New Post SVB Highs

  • Fed Funds implied rates are slightly off fresh post-regional banking woe highs having reversed a dip after the FOMC minutes. Of note, the terminal effective sits around 5.27% with the July decision and with 42bp of cuts from the peak to year-end for less than one full 25bp cut priced from current levels.
  • Cumulative change from 5.08% effective: +10bp Jun (-0.5bp), +19bp Jul (-1bp), +11.5bp Sep (unch), -4bp Nov (+1bp), -23bp Dec (+2bp), -41bp Jan (+3bp).
  • Bostic (’24 voter) spoke late yesterday, possibly mildly more hawkish than recently by noting that the “best case” is the Fed won’t mull rate cuts until well into 2024. Continued data dependency isn’t particularly different to Monday saying he’s comfortable waiting a bit to see how things play out and that policy acts with a lag.
  • Ahead, Barkin (’24 voter) and Collins (non-voter, with text). Barkin spoke Mon (won’t pre-judge June policy decision) and before that May 16 (willing to raise raises again if necessary) whilst Collins last spoke in March.

Source: Bloomberg

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