The market has moved to discount the likelihood that the next four rate hikes by the Federal Reserve will be in 50 bp increments. As a result, the implied yield of the December 2022 Fed funds futures contract has risen for six consecutive sessions, finishing last week near 2.70%, a roughly 35 bp increase. Now, the swaps market sees a terminal Fed funds rate in this cycle near 3.50%. The only major central bank that might be able to keep up with the Fed is the Bank of Canada. The swaps market has discounted 200-225 bp in tightening over the next four meetings. The positive impact on the Canadian dollar appears to have ... (full story)