📝 Market Is Priced In to Fed's Terminal Rate: UBS Strategy

I think the market is exhausted with the USD higher narrative - generally I would note much lighter participation following the print (and would highlight there's still risk of the next print to be worse), but there's been low interest to participate. Maybe there's some profit-taking on USD longs going through and just little interest to take the other side - it could be some chips are getting taken off the table into yearend.

I'd mention as well from the risk-rally side: the market is priced pretty much to a terminal rate where the Fed is suggesting it will halt and reassess so the impulse for further USD gains weakens a bit. As time goes on, we're approaching the point where the Fed market pricing suggests they Will stop and see how all of the hiking/active QT they've been doing will filter into the system. Its clearly still great carry being long dollars, but direction momentum can reverse. I would note on the latest NFP/CPI prints, though the signaling was very clearly - USD higher - the follow through has been more lackluster. - UBS Strategy