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Waller’s Comments Smoothly Digested, Still 2.5 Cuts Priced By End-2024

STIR
  • Very limited change in near-term Fed Funds implied rates on Waller’s prepared remarks and Q&A.
  • There was at first a marginal tilt lower on the prepared “Getting closer” speech that was soon reversed, before being helped a touch higher by the Q&A comment that absent a shock there is no macro impact of Sept vs a Nov or Dec cut, along with the earlier strength in IP data perhaps being better reflected.
  • Cumulative cuts from 5.33% effective: 0.5bp Jul, 25.5bp Sep, 41bp Nov, 53bp Dec and 81bp Jan.

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