Rates as of 0630 GMT

Market Recap

French President Macron won a second term, the first French president to achieve that goal in two decades. Preliminary results suggest he performed better than had been expected from the polls that appeared right before the election, although he didnt do as well as he did in 2017.

Macrons win was good news for Europe, as voters rejected Le Pen and her antiEU, antiNATO position. There was also good news from Slovenia, where the countrys prime minister, Janez Jansa, a Trump admirer, appears to have lost the election to centrist rivals.

Nonetheless the news didnt do much for EUR. Currencies are being driven by monetary policy divergence. The expected tightening of US policy is whats driving markets. Speaking on an IMF panel last week in his last remarks before Fed officials enter their blackout period, Fed Chair Powell supported the idea of frontloading the hiking cycle and getting the Feds policy rate, the fed funds rate, back to neutral as quickly as possible. Markets are now pricing in more than 50 bps of hikes at the next three meetings of the ratesetting Federal Open Market Committee FOMC.

The market is pricing in a 99 chance of a 50 bps hike at the May 4th FOMC meeting.

and another 50 bps hike at the June 15th meeting. Thats a change over the last week.

Plus a third 50 bps hike at the July meeting! A big change from a week ago.

Speaking on the same panel, European Central Bank ECB President Lagarde noted that there are…