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Modest Build In Fed Cut Expectations With Q3 CPI Ahead

STIR
  • Fed Funds implied rates see limited spillover from the BoJ overnight, little changed for near-term meetings to the expected terminal in January and after that with a modest build again in cut expectations.
  • Cumulative hikes from 5.33% effective: 0bp for tomorrow’s FOMC (unch), +5.5bp for Dec (unch) and +8bp for Jan (-0.5bp) for a terminal 5.41%.
  • Cuts from terminal: 28bp to Jun’24 (from 26.5bp) and 83bp to Dec’24 (from 80bp), the latter at similar levels to the past few sessions at the high end of the rough 65-85bp range since US CPI on Oct 12.
  • The Q3 ECI headlines today’s docket at 0830ET but we also get house prices after recent notable strength, the MNI Chicago PMI and Conference Board consumer confidence.

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