EURIBOR OPTIONS: Put spread buyer

• Fed Funds implied hikes have softened modestly from late yesterday although the 67bps for the Sept FOMC remains close to pre-payrolls levels. Further out, the terminal 3.91% for Mar’23 is down from a high of 3.96% but within yesterday’s range followed by the same ~35bps of cuts to Dec’23.
• Barkin (’24 voter) pre-empted his upcoming Q&A with MIT at 0900ET, telling the FT rates must stay high until policy makers are convinced that rampant inflation is subsiding. “Have to move to a level where inflation expectations come down in order to have enough restriction on the economy to bring inflation down”, “the destination is real rates in positive territory” with a nominal 3.5-4% not surprising him at all.
• Aside from potential spillover from the BoC decision, further Fedspeak headlines the US session including Mester (’22 voter) speaking to MNI at 1000ET and then VC Brainard on the economic outlook at 1240ET having not talked meaningfully on mon pol since early June.
• The Beige Book is again of interest after yesterday’s increased discrepancy between the ISM and PMI service indexes.

FOMC-dated Fed Funds implied hikes for Sep 21 FOMC (white) and rates at specific meetings (bottom panel)Source: Bloomberg