Quick Take The outlook from markets has completely changed in the past few weeks due to banking failures in the US and EU. The market is now pricing in no more rate hikes but substantial cuts, ending 2023 around 3.75-4%. Four cuts are priced into the rest of the year, while the market suggests a greater than 90% chance the Fed is done raising rates. The fed balance sheet has grown for the past two consecutive weeks; roughly $100 billion was added to the balance sheet this week. While two-thirds of quantitative tightening have been undone in a matter of weeks. This is the third biggest percent change to the fed balance sheet, only being beaten by covid and 2008. Meeting Probabilities: (Source: CME) Total Assets percent change: (Source: FRED)

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