Rate cuts by year-end
- Fed: 57 bps (94% probability of no change at the upcoming meeting)
- BoE: 49 bps (80% probability of rate cut at the upcoming meeting)
- ECB: 7 bps (98% probability of no change at the upcoming meeting)
- SNB: 8 bps (92% probability of no change at the upcoming meeting)
- BoC: 8 bps (92% probability of no change at the upcoming meeting)
Rate hikes by year-end
- BoJ: 52 bps (92% probability of no change at the upcoming meeting)
- RBA: 39 bps (76% probability of no change at the upcoming meeting)
- RBNZ: 27 bps (99% probability of no change at the upcoming meeting)
You can find last week’s market pricing here.
The most notable changes were seen with the BoE, the BoC and the RBNZ. Traders increased the probabilities for a rate cut at the next meeting substantially following the much weaker than expected UK labour market report on Tuesday and mostly benign UK CPI data on Wednesday.
The market has also scrapped all the rate hike bets for the BoC following soft inflation data and growing risk of a negative outcome from the USMCA review.
Lastly, we saw a notable dovish repricing on the RBNZ front as the central bank disappointed the hawks at the Wednesday’s policy decision. In fact, the RBNZ held the OCR unchanged at 2.25% as widely expected but didn’t bring the first rate hike to December 2026 as the market was anticipating.
Moreover, the overall message wasn’t as hawkish as expected, on the contrary, the central bank erred on the cautious side and focused more on the weak spots in the economy and downplayed the recent rise in inflation.
Today, we still have the US Flash PMIs and a possible US Supreme Court decision on Trump’s tariffs that could influence the market pricing before the weekend.
This article was written by Giuseppe Dellamotta at investinglive.com.
