The eurodollar curve is pricing in faster rate hikes and a higher terminal rate after Friday’s non-farm payrolls showed 321K jobs created in November.
It’s just one number but the market is getting giddy about the prospects for Fed hikes, despite low inflation.
Eurodollar curve
Even in April, the market is pricing in an additional 10% chance of a hike. That’s a dicey prospect with the Fed retaining ‘considerable time’ in the statement but that chance it’s removed at the Dec 16 meeting is high.
Meanwhile, the market sees about a 68% chance of more hikes from December 15 through Dec 16 — or about 17 basis points of additional hikes.
