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Fed Rates Shrug Off The Day’s Stronger Labor Data Ahead of NFPs

STIR
  • Fed Funds implied rates have seen little lasting impact from today’s stronger than expected unit labor costs in Q1 and declines in weekly jobless claims, with the above flow instead at play.
  • The Dec’24 rate sits at session lows a little below 4.94%, some 11bp lower now since shortly before yesterday’s FOMC decision – see changes vs pre-FOMC levels across the curve in the below image.
  • Cumulative cuts from 5.33% effective: 3bp Jun, 9bp Jul, 19bp Sep, 27bp Nov and 39bp Dec.
  • Tomorrow’s NFP report is firmly in focus and as we write in our preview there is added sensitivity to any weakening in the labor market balance. See here: https://roar-assets-auto.rbl.ms/files/62435/USNFPMay2024Preview.pdf

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