**As seen in Macro Walk report 08/20/23, subscribe at cablefxm.co.uk/reports
The implied rates section in our Macro Walk report shows an increase in Fed hawkish bets via overnight index swaps. The curve has seen an increase of about 5bps and 10bps for the December and January tenors, respectively
This is a dynamic of reduction of rate cut expectations for next year, some desks have been critical about these and have said the current 2024 pricing is exaggerated
The first Fed rate cut is currently priced for May, the market has also seen peak rates reached. The question for Fed Chair Powell is for how long will the FOMC be willing to hold rates at current levels. U.S. 5-year breakeven rates currently tick above target at 2.3%, the 2-year equivalent is closer to 2.0%
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