Rate cuts by year-end
Fed: 50 bps (95% probability of no change at the upcoming meeting) ECB: 22 bps (94% probability of no change at the upcoming meeting) BoE: 51 bps (75% probability of rate cut at the upcoming meeting) BoC: 28 bps (76% probability of no change at the upcoming meeting) RBA: 60 bps (85% probability of rate cut at the upcoming meeting)RBNZ: 31 bps (57% probability of rate cut at the upcoming meeting) SNB: 10 bps (87% probability of no change at the upcoming meeting)BoJ: 12 bps (99% probability of no change at the upcoming meeting)
We got some slightly more hawkish repricing for a couple central banks. The pricing for the Fed consolidated around 50 bps after the NF report which is the Fed's baseline scenario of two rate cuts by year-end.
There was also a hawkish repricing for the RBA after they surprisingly delayed the rate cut and sounded cautious about rushing on monetary easing.
Finally, despite the US tariff letters threatening much higher rates if countries don't reach a trade deal, the market largely ignored them. The context is much different than April when the tariffs led to very dovish expectations for the central banks. Now the market continues to expect deadlines to be postponed indefinitely and trade deals to be reached eventually.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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