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Terminal Fed Rate Expectations Trimmed

STIR FUTURES
  • Fed Funds implied hikes have cooled modestly today, most notably for terminal rates off cycle highs.
  • 77.5bps for Nov 2 (unch), a cumulative 140.5bp to 4.49% for Dec (-0.5bp), terminal 4.90% Mar’23 (-4bp) and 4.54% Dec’23 (-2.5bp).
  • Data have been mixed with surprisingly resilient IP offset by a sharp decline in the NAHB housing index, whilst Bostic (’24 voter) didn’t move the needle (lot of churn in labor market, employers struggling to find entry-level workers).
  • Kashkari (’23) ahead at 1730ET before further Fed commentary backloaded in tomorrow’s session including the Beige Book and Bullard (’22).

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