Schmid Comments Do Little For Fed Pricing

'24 FOMC-dated OIS contracts are little changed to 2.5bp softer today, with moves in wider FI markets driving.

• ~19bp of cuts are priced through the June ’24 FOMC, moving back towards 80% odds of a 25bp cut.
• Dec ’24 FOMC-dated OIS shows ~80bp of cuts.
• Markets haven’t challenged 75bp of ’24 cuts during the recent repricing (the median Fed dot indicated 3x 25bp cuts in ’24, as of the Dec ’23 SEP).
• Asia-Pac hours saw rare comments from Kansas City Fed President Schmid, noting that the Fed can be patient before easing monetary policy, which is in line with the central FOMC view.
• Schmid also outlined his preference for a smaller Fed balance sheet via continued QT.
• Tuesday data releases include durable goods and consumer confidence, as well as a variety of house price and regional Fed activity measures.
• Fedspeak from Barr is also due, although that is set to focus on counterparty credit risk.