Fed funds futures are mildly firmer
Fed funds futures are mildly firmer in tandem with the small gains in Treasuries. The market is still correcting from Friday's jostling after the jobs report posted a weaker than expected headline gain, alongside some better than projected internals that left a rather neutral report overall. Additionally, there's considerable debate among policymakers, as evidenced in Fedspeak and the FOMC minutes, over inflation trends and the Phillips Curve. The market is also at odds with the FOMC's dot plot showing forecasts for three moves this year. Meanwhile, implied rates are suggesting about a 75% chance for a 25 bp tightening at the March 20, 21 FOMC, with about 55% probability for a second hike before the end of Q3. Of note, however, the futures have started to advance the timing to August from September. Implieds are only showing about 25% to 30% chance for the third tightening.