now the voting will go to Jeffries
Guaranteed only a 25bp raise at next meeting and then pause (if they don't create a crisis in the ensuing time frame) and has ZERO to do with inflation #s (CPI)-and everything to do with derivatives
Traders Slash Fed Bets After Data; Key Yield Inversion Deepens
US short-term yields slumped Friday as slower-than-anticipated wage growth and an unexpectedly weak services-sector indicator prompted traders to trim expectations for just how high the Federal Reserve might push its overnight benchmark.
The moves reversed the previous day’s bond-market selloff and came even as job growth and the unemployment rate for December were better than expected.
Most segments of the Treasury yield curve steepened as two- and three-year yields each plummeted around 20 basis points and were near their session lows late in New York. Still, three-month bill yields exceeded the 10-year by a full percentage point for the first time in decades as another Fed rate increase is expected in February. That gap is seen by many as a reliable signal that a recession could be in store.
Swap contracts referencing Fed meeting dates showed investors now expect the policy rate to peak at under 5% this cycle, down from 5.06% just before the latest employment data. While traders remain split about the size of the February move, the 33 basis points priced in suggests 25 basis points is now considered more likely than 50. Longer-dated contracts still anticipate rate cuts by year-end. The dollar fell and was down 1.1% late on Friday, while the S&P 500 index closed 2.3% higher. The US jobs data capped a week of solid labor market metrics that sparked a run up in Treasury yields. A survey of private hiring and the JOLTS job openings suggested underlying demand for workers that in the current environment of hot service sector inflation could keep the Fed on course for further rate hikes.
On the other hand, the Institute for Supply Management’s services gauge unexpectedly shrank at the end of 2022, with steep declines in measures of business activity and orders that, if sustained, risk heightening concerns about the demand outlook. The release of that data after the jobs report turbocharged earlier front-end moves and pushed the curve inversion back into deeper territory.
https://www.bnnbloomberg.ca/traders-slash-fed-bets-after-data-key-yield-inversion-deepens-1.1866640
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Cap#3 is Derivative Contracts by Type for U.S. Banks form O.C.C. 3rd Qtr data
Page 33
https://www.occ.gov/publications-and-resources/publications/quarterly-report-on-bank-trading-and-derivatives-activities/files/pub-derivatives-quarterly-qtr3-2022.pdf
Planefag CONUS Activity: SAM947 (XA947) G5 departed Hilo, Hawaii after arriving last night EN, SPAR976 Learjet 35 east from Nellis after an overnight, SAM878 G5 departed Los Angeles Int'l after an overnight-was at Vandenberg SFB yesterday-and had a 40m stop at Peterson SFB and now heading back to JBA, LLOYD34 E-6 Mercury in the Gulf of Mex from Tinker, RCH4561 C-17 SE from Memphis and likely another run for Potato equipment
South America Activity: RAF9001 KC-3 Voyager MRTT heading to Falkland Islands from Cabo Verde-second trip in 24 hours for this one and a coupla prisons located on Cabo Verde
>>18091701 Traders Slash Fed Bets After Data; Key Yield Inversion Deepens
try caps next time