📝CPI Print Should Cement Fed Stepdown: UBS Strategy

The October US CPI print is good news for the Fed and should cement the stepdown in hiking pace to 50bp at December's FOMC. This should greenlight another bout of USD weakness, a narrative the market has already been leaning into, setting up further USD turnover into 2023.

I would still note that Powell was explicit that the pace of hiking isn't of paramount concern any longer, but rather the focus is on the level of terminal rates / how high for how long. That said, I would still note that terminal rates converging around 5% puts more on the 'peak Fed' narrative. - UBS Strategy