Rate hikes by year-end
- RBNZ: 57 bps (71% probability of rate hike at the next meeting)
- Fed: 42 bps (64% probability of no change at the next meeting)
- ECB: 41 bps (70% probability of rate hike at the next meeting)
- BoE: 37 bps (92% probability of no change at the next meeting)
- RBA: 28 bps (61% probability of no change at the next meeting)
- BoJ: 25 bps (97% probability of no change at the next meeting)
- BoC: 20 bps (93% probability of no change at the next meeting)
- SNB: 15 bps (84% probability of no change at the next meeting)
- Last week’s market pricing here
This week has been pretty much empty in terms of important data releases and central bank events. We did have the ECB rate decision but the central bank kept everything unchanged and didn’t provide much in terms of forward guidance other than signalling a rate hike in September if the inflation outlook were to deteriorate.
The markets are being driven solely by the US-Iran war as it’s pushing oil prices further to the upside, with new risks emerging like disruptions in the Red Sea and potential US increase in military pressure. Therefore, traders will continue to keep a close eye on geopolitical developments.
There is also some fear that the Fed could surprise with a rate hike at the upcoming July meeting if the situation in the Middle East doesn’t improve. Although the probability is low, if it were to happen, we can expect some major pain in the markets after such decision.
This article was written by Giuseppe Dellamotta at investinglive.com.
