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Market Roundup: Dec 50Bp Hike Still Expected Post-Jobs

US TSYS
Tsys see-sawing near post-data lows, swings narrowing as market settles in following upside November jobs gain surprise. First half volatility cooling as mkt digested Sep/Oct net down-revision of -23k, and higher than expected AHE of 0.6% MoM vs 0.3. Gains were broad-based but stand out in the “information” industry (+1.55% MoM).
  • Short end Eurodollar futures, while off pre-data high of 95.18 (+0.045) trades 95.1475 (+0.0125) - underscoring 50bps hike at the Dec 14 FOMC.
  • Weaker levels out the strip spell a different story (EDH3-EDU3 -0.070-0.125) as pre-data dovishness (or less hawkish at least) faded. Fed funds implied hike for Dec'22 holding at 51.8bp, while Feb'23 cumulative climbs to 89.1bp (84.8bp pre-data) to 4.731%, Mar'23 cumulative 105.3bp to 4.892%; Fed terminal rate has risen to 4.96% in May'Jun'23 vs. 4.835% pre-data (4.915% early Thu).
  • Yield curves, while off Mon's deeper inversion, holding near low-end wide session range: 2s10s currently -3.599 at -76.310 after tapping -63.170 briefly in post-data volatility.
  • Fed enters policy blackout at midnight tonight (Fed speakers Barkin and Evans offered no rebuttal on jobs). Focus will be on next week Fri Nov PPI (final demand YoY 7.2% est vs. 8.0% prior) and CPI on Dec 13, the day ahead the final FOMC annc of 2022.

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