Whether the Fed ends at 4.50-4.75% or 4.75-5.00% is immaterial but a strong jobs report today raised the chances that the hiking cycle restarts next year.

The easiest way to see that is in the 2-year note yield, which is trading below the Fed terminal rate but does a good job of indicating the highs. Earlier today we tested the Sept peak but have backed off from 4.35% down to 4.29%.

US 2 year yield

With this decline, the dollar is backing off the from the highs as well but the conversation to monitor is whether the Fed will need to hike more in 2023.