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Holding Fed Terminal Just Over 5%

STIR FUTURES
  • The terminal rate implied by FOMC-dated FF futures sits slightly off new highs of 5.02% (+4bp) for the May’23 meeting, as it continues solid gains in the second half of the week.
  • Fedspeak has been fairly limited today and with only NY Fed’s Williams scheduled for opening remarks tomorrow on the last day before the media blackout.
    • Harker (’23) looks for rates “well above” 4% by year-end as it keeps hiking “for a while”, whilst seeing a pause sometime in 2023 but not ruling out further hikes thereafter. That is however after sufficient time to let mon pol do its work.
    • Governor Cook meanwhile noted that inflation remains stubbornly, unacceptably high yet with risks skewed to the upside with ongoing rate hikes likely required.

FOMC-dated Fed Funds implied rate for May'23 meetingSource: Bloomberg

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