Quick Take
- The market uncertainty of what the Federal Reserve will do next is obvious, as expectations are now almost a 50/50 split between a pause or a 25bps rate hike at the upcoming FOMC on May 3.
- But it gets even more uncertain as we go through the futures of the fed funds rate.
- In June, the market is pricing in three different options a cut, hold, and a hike simultaneously. A pause is the most favored option currently.
- Today, the rate across the yield curve has spiked from US03M to US30Y.
- Even with stubbornly high core inflation, the fed may opt to pause due to the financial instability.
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