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Fed Terminal Holds Just Off Post-PMI Cycle Highs

  • Fed Funds implied hikes remain off yesterday’s post-PMI highs, with a rise off overnight lows stalling in modest spillover as the ECB terminal rate dipped from a new cycle high after Villeroy comments.
  • 29.5bp for Mar (unch), cumulative 55bp for May (-0.5bp), 77bp to 5.35% Jul (-2bp, close to 5.34% in Sep) before 18bp of cuts to 5.16% Dec (-2.5bp).
  • Bullard (non-voter) speaks on CNBC at 0700ET having said he wouldn’t rule out supporting a 50bp hike in March on Feb 16 (at the time driving a step higher in rate expectations), before FOMC Minutes at 1400ET.

FOMC-dated Fed Funds futures implied rates at specific meetingsSource: Bloomberg

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