STIR: Back Towards Pricing 50bp Of Fed Cuts Through Dec After Data
May-29 13:02
Modest dovish adjustments in Fed pricing following the mix of higher-than-expected weekly jobless claims figures (albeit countered a little by lower revisions to the prior week), a soft secondary Q1 personal consumption read and downtick in the second estimate of the core Q1 PCE data.
- Fed Funds covering the June FOMC show 0.5bp of easing, with 6bp showing through July, 18.5bp through September, 30.5bp through October and 47bp through December.
- That compares to 0.5bp, 5.5bp, 17.5bp, 29.5bp and 45.5bp ahead of the data.
- December implied rates back into May’s pre-existing range after the data, with the hawkish adjustment that followed the Court of International Trade’s ruling against a large portion of U.S. President Trump’s tariffs more than reversed.
- Terminal rate pricing on the SOFR strip (SFRZ6) back to 3.31% compared to 3.405% seen at one stage overnight.
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