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Mizuho Eyes 6% Terminal Rate

FED
The first 6% terminal Fed funds rate outlook from the sell-side that we have seen comes from Mizuho, who have upped their 2023 end-year forecast by 50bp to 5.75-6.00%.
  • They write that after the latest jobs and inflation reports showing "unexpected resilience in the economy" "temporarily muting" the impact of policy tightening, "it becomes highly likely that the Fed will maintain its large-scale rate hikes through year-end."
  • 5.75-6.00% is well above market pricing, which sees rates peaking around 100bp lower than that in March 2023 (4.91%, +183bp from current rates and on the high end of a 4.75-5.00% target range).

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