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Fed funds futures are surging because the CPI report takes the FOMC out of the image for now. Deferred contracts are pacing the transfer, although we suspect the market is getting forward of itself, shifting ahead price cuts and pricing in a string of easings subsequent 12 months. The implied Could contract suggests about an 80% probability for 25 bp drop in charges with June greater than totally priced for a reduce. The December contract costs 100 bps in easing.
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