Rate cuts by year-end

Fed: 83 bps (92% probability of no change at the upcoming meeting)
ECB: 59 bps (70% probability of rate cut at the upcoming meeting)
BoE: 92 bps (99% probability of rate cut at the upcoming meeting)
BoC: 42 bps (55% probability of no change at the upcoming meeting)
RBA: 119 bps (97% probability of rate cut at the upcoming meeting)
RBNZ: 81 bps (89% probability of rate cut at the upcoming meeting)
SNB: 23 bps (68% probability of rate cut at the upcoming meeting)

Rate hikes by year-end

BoJ: 16 bps (99% probability of no change at the upcoming meeting)

The positive Trump’s comments on China late yesterday saw the market paring back some of the agressive easing bets we had just before his remarks. For example, the market doesn’t see any chance of a 50 bps cut for the RBA now.

Interest rates expectations depend on tariffs and trade deals now. More positive developments will see the market repricing expectations on a more “hawkish” side, while negative news will keep the more dovish bets alive.

In my opinion, we will continue to see de-escalation and eventually get some key developments that will take us back to the market pricing in better times ahead.

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