As markets stabilise, so do the rate cuts expectations ...Middle East

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As markets stabilise, so do the rate cuts expectations

Rate cuts by year-end

Fed: 96 bps (61% probability of no change at the upcoming meeting) ECB: 77 bps (93% probability of rate cut at the upcoming meeting) BoE: 75 bps (94% probability of rate cut at the upcoming meeting) BoC: 76 bps (66% probability of rate cut at the upcoming meeting) RBA: 110 bps (94% probability of rate cut at the upcoming meeting)RBNZ: 100 bps (76% probability of rate cut at the upcoming meeting) SNB: 21 bps (53% probability of rate cut at the upcoming meeting)

Rate hikes by year-end

    BoJ: 10 bps (98% probability of no change at the upcoming meeting)

    Things changed a bit from yesterday's update as the markets pared back some of the aggressive rate cuts bets amid some positive tariffs headlines and a stabilisation in the stock market selloff. This is something we've also seen in the bond market with the 10 year Treasury yields back to last Wednesday's levels.

    In fact, the rate cuts bets have been a function of the stock market selloff as that impacts negatively the wealth effect and depresses the consumer and business sentiment. We are not out of the woods yet but as long as the stock market continues to rebound, the rate cuts bets will likely keep on being trimmed.

    The next few days will be key.

    This article was written by Giuseppe Dellamotta at www.forexlive.com.

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