The defining feature of US rates this week was not a wholesale change in the expected policy destination. It was a redistribution of risk across the strip and curve, followed by the arrival of a new policy variable at the long end.
Near-dated STIR pricing became more patient, the Treasury curve bull-steepened and the front end outperformed as the market reduced the probability that the Federal Reserve needs to act immediately. Yet the broader tightening path remains intact. Overnight cash is 3.63%, the implied FOMC path still rises toward roughly 4.01%, and the SOFR curve reaches around 4.12%. The market has delayed some of the tightening impulse rather than removed it.
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