Cuts winning out vs hikes now. Market net pricing 5 bps of cuts this year
Ed Bradford
Sure. These are all just short-term stuff that leveraged types care about. Most peeps can ignore
At the start of the war, the forward measure surged higher along with the current 1-year swap as inflation concerns dominated, but lately weakness has crept into the forward as the market stated pricing downside risks.
(h/t MS)
Front-end will like this. 1y perky but longer run stable. Fed friendly
Not often you see STIRs trying to price hikes and cuts at the same time, but that is the current level of uncertainty. What will dominate in the next few months, inflation or a growth slowdown? Get that correct and you are golden
Obviously, buying UST 5s on Friday vs swap, outright, or wings was the correct trade
Think of the 1-year forward 1-year inflation swap as a market gauge for the current inflation vs growth battle.
Fed funds futures mostly back to "normal" as the near term rate hike gets priced out.
Live chart vs last Thurs.
Hormuz has been easier to navigate this weekend than TSA.
