STIR: US Rates Near Hawkish Extremes As Crude Rally Adds To NFP Impulse
Jun-08 10:42
- US rates are a little off overnight lows but still see net losses as a strong increase in crude oil futures on Israel and Iran trading missile attacks has seen an additional hawkish impulse after Friday’s strong payrolls report.
- President Trump recently saying both Israel and Iran are looking to do an immediate ceasefire prompted small net gains, with more than half the snap reaction reversed.
- Fed Funds implied rates are 0.5bp higher for next week’s meeting, 2bp higher for Sep and then 4bp higher for the Dec meeting and onwards. It now sees the Dec 2026 rate 13.5bp higher than before Friday’s NFP report.
- FF cumulative hikes from 3.62% effective: 0.5bp Jun, 5bp Jul, 13bp Sep, 18.5bp Oct, 30bp Dec building to 42.5bp Mar 2027 and 47.5bp Jun 2027.
- SOFR futures are mostly 1-2 ticks lower across the curve. The implied yield is seen peaking at 4.115% (M7, +2bp) for what would be a fresh highest close of the Middle East conflict - it earlier today touched 4.155% for intraday highs of the conflict.
- The FOMC is now in media blackout whilst data is light today before building up to Wednesday’s CPI release.
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