Light Dovish Bias On

FOMC-dated OIS sees a light dovish bias early on Thursday, with the softer-than-expected macro data (in the form of Japanese & UK Q4 GDP and Australian labour market prints) providing the headline inputs.

• ~98bp of cuts are showing through ’24 at present, with that marker operating either side of Wednesday’s post-Goolsbee dovish extremes (range from just ahead of the CPI print is 113bp down to 85bp of cuts).
• Further forwards, ~11bp of cuts are priced through the May ’24 FOMC, while ~28.5bp of cuts are seen through the June ’24 FOMC.
• Late on Wednesday we saw Fed Governor Barr note that he's confident inflation is on a path to the central bank's 2% target, but he stressed that more data is needed before interest rates can be lowered.
• Weekly jobless claims and retail sales data headlines the NY docket today, with the latest Philly Fed & Empire manufacturing surveys also due. Elsewhere, Fedspeak from Waller will cross (although it is on the topic of the USD’s international role).