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Fed Terminal Winds Back Earlier Post-Williams Increase

STIR FUTURES
  • Fed Funds implied hikes are little changed on the day in the near-term, with 26bp for March and a cumulative 45bp for May.
  • Only slightly larger moves on the day further out the curve hide larger intraday moves. Terminal rate expectations have unwound a large part of a move that started with hawkish remarks by NY Fed Williams’ standards, back at 5.16% for the July meeting (cumulative 58bp of hikes) for just +0.5bp on the day but with a range of 5.13-5.18%.
  • It's followed by 32bps of cuts to year-end, typical for levels since payrolls.

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