ED Z8-Z9 is looking too low now at 33.5. Current FF is around 141 bps + 20 bps 3mo LIBOR-FF gives us 161 bps 3mo LIBOR ex March hike pricing. Z8 is 248 bps. 248 – 161 = 87. Diff between 2018 and 2019 hikes and the ratio is too high. If the Fed has to tighten at pace of 3.5 hikes this year, then pricing 1.5 hikes for the next year is too dovish. I am not sure having 3.5 hikes in 2018 stacks up with the board’s thinking. Williams and Mester might be up for that. Dudley wanted three, Bostic wanted 2. Powell, Barkin and Brainard have been quiet. Alternatively more weak inflation prints or whatever else push some of the tightening from 2018 to 2019. Logically the risks are expectations of major economic deceleration in 2019 and/or Z9 getting crushed in bull market because of a higher beta than Z8. I’m bit late with this as Z8-Z9 started going up from around 20 bps on 10/01/2018, but back then Z8 was 224 bps, so 224-161 = 63 hikes for 2019. The ratio of 2019/2018 was even higher (3+) but difference was smaller (43bp then vs 53.5 now).