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STIR: Fed Terminal Rate Expectations Continue To Unwind Recent Declines

STIR
BulletMarketsFixed Income Bullets
  • Fed Funds implied rates out to mid-2025 have continued to very slowly pare declines seen after Friday’s payrolls report.
  • Cumulative cuts from 4.58% effective: 22bp Dec, 28bp Jan, 44bp Mar and 65bp June.
  • Further out, SOFR-derived terminal rate expectations have now more than reversed their decline on the payrolls report. 3.64% implies approximately 95bp of cuts for the cycle (including the mostly priced 25bp cut next week), having now added less than 20bps of cuts to the path since terminal rate highs seen in the week after the presidential election.

  • Today see productivity/ULCs for Q3 headline the data docket with greater focus on tomorrow’s CPI release. See the MNI US CPI Preview here.
     

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  • Fed Funds implied rates out to mid-2025 have continued to very slowly pare declines seen after Friday’s payrolls report.
  • Cumulative cuts from 4.58% effective: 22bp Dec, 28bp Jan, 44bp Mar and 65bp June.
  • Further out, SOFR-derived terminal rate expectations have now more than reversed their decline on the payrolls report. 3.64% implies approximately 95bp of cuts for the cycle (including the mostly priced 25bp cut next week), having now added less than 20bps of cuts to the path since terminal rate highs seen in the week after the presidential election.

  • Today see productivity/ULCs for Q3 headline the data docket with greater focus on tomorrow’s CPI release. See the MNI US CPI Preview here.