Fed funds futures are surging as the CPI report takes the FOMC out of the picture for now. Deferred contracts are pacing the move, though we suspect the market is getting ahead of itself, moving forward rate cuts and pricing in a string of easings next year. The implied May contract suggests about an 80% chance for 25 bp drop in rates with June more than fully priced for a cut. The December contract prices 100 bps in easing.
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