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Post-LIBOR Settle Update: 3M High, Powell/Biden on Inflation

US EURODLR FUTURES
Lead quarterly EDM2 holding steady at 98.24 after latest 3M LIBOR set' climbs to new 2Y high of 1.61071% (+0.03028 and +0.09143 for wk). Markets repricing chances of additional rate hikes out the curve. Trading desks note rates came under pressure early in Asia trade after wires reported Fed Chairman Powell will meet with President Biden today at 1315ET today to discuss inflation.
  • Balance of Whites (EDU2-EDH3) currently trading -0.055-0.080, Reds (EDM3-EDH4) -0.080-0.070, Greens through Golds (EDM4-EDM7) steady to -0.070-0.060 w/ Golds narrowly outperforming.
  • Inversion holds to front Reds: low mkt measure of confidence in Fed managing a soft landing/avoiding recession has extended: Red Sep (EDU3) currently trading 96.835 vs. Red Jun (EDM3) at 96.845. Inversion starts to flatten out (dis-invert) around Blue Sep'25-Dec'25 trading 97.165.
  • FI option trade over the last few sessions has been mixed on light volumes heading into the extended Memorial Day holiday weekend, start to summer trade.

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