- A series of disappointing US economic data and the Fed's commitment to rein in inflation have heightened concerns that economic weakness will limit the Fed's ability to hike rates.
- For the first time, the implied yield of the December 2023 Fed funds futures contract is below the December 2022 yield.
- The peak in Fed funds is now seen near around 3.5% in Q1 '23. The peak is lower and earlier than the market expected after the FOMC meeting that resulted in a 75 bp hike on June 15. This seems to be a necessary pre-condition of the end of the dollar's rally.
For further details see:
Dollar: Don't Get Too Far Ahead Of The Story