March 28, 2023

Implied Fed funds Peak – from September to May

Utilizing CME futures, from 1:30 CT today:

Figure 1: Effective Fed funds (black), implied Fed funds as of March 15 1:30 CT (red square), March 14 (pink square), March 8 (sky blue inverted triangle), and February 15 (green triangle). Source: Fed by means of FRED, CME Fedwatch, accessed 3/15 1:40 PM CT, and authors computations.
Two pieces of news today– the first was regarding Credit Suisse, the second is macro news, where the PPI undershot, as did retail sales (a little). My guess is that financial stress controlled.
It is fascinating that the course was higher a week ago relative to a month back, most likely integrating Chair Powells relatively hawkish remarks concerning inflation persistence and consequent Fed policy. The downshift in the implied path of the Fed funds is all the more remarkable in that context


This entry was posted on March 15, 2023 by Menzie Chinn.

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