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Implied Rates Hold Near Session Highs After Pre-NFP Labor Data Boost

STIR
  • Fed Funds implied rates sit close to session highs after stronger than expected ADP employment growth and surprise declines in weekly jobless claims data helped extend the earlier lift.
  • It sees 17.5bp of cumulative cuts for the March FOMC (vs fully priced 25bp cut in late Dec), 61bp cuts for June and 137bp cuts for Dec (vs 75bps for median dot in Dec SEP).
  • Coming ahead of tomorrow’s payrolls report, 2H24 implied rates are some 9-10bps higher than levels shortly before yesterday’s FOMC minutes, roughly half of which has come since initial claims.

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