Money markets cement bets on early 2023 hike after Fed’s Clarida – Bloomberg

With the Fed tapering tantrums in full swing again, Bloomberg came out with the piece citing eurodollar futures to back the US Federal Reserve’s rate hike in 2023.

Key quotes

Money-market concerns that a weaker-than-expected economy might delay Federal Reserve policy tightening proved short-lived Wednesday, with hawkish comments from Vice Chairman Richard Clarida helping to cement bets for an initial rate hike in early 2023.

A softer-than-anticipated report on company jobs growth from ADP earlier in the day helped spur a rally in eurodollar futures, which at one point showed the first quarter-point hike coming somewhere around June 2023.

That was rapidly unwound after Clarida said that the ‘necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022.’

San Francisco Fed President Mary Daly echoed calls for tapering, saying officials may start tapering asset purchases later this year or in early 2022, according to an interview on PBS aired after the close of trading. Treasuries remained under pressure in Asia, with 10-year yields touching 1.20%.

Market reaction

Following the release, EUR/USD eases to 1.1835 but remains sluggish after a four-day downtrend.

Read: EUR/USD retreats below 1.1850 amid stronger US dollar