How have rates of interest expectations modified this week?

Rate cuts by year-end

• Fed: 55 bps (89% probability of rate cut at the upcoming meeting)
• ECB: 10 bps (96% probability of no change at the upcoming meeting)
• BoE: 10 bps (99% probability of no change at the upcoming meeting)
• BoC: 24 bps (64% probability of no change at the upcoming meeting)
• RBA: 33 bps (80% probability of no change at the upcoming meeting)
• RBNZ: 36 bps (72% probability of rate cut at the upcoming meeting)
• SNB: 6 bps (91% probability of no change at the upcoming meeting)

Rate hikes by year-end

• BoJ: 17 bps (90% probability of no change at the upcoming meeting)

We haven’t seen much change this week as the lack of key US data and major news kept the status quo. The only notable change was seen with the RBA pricing after the much higher than expected Australian monthly CPI data. We’ve seen a more hawkish repricing but it wasn’t that big as the central bank is now more focused on the labour market.

We have jobless claims today that could influence the market pricing although we would need notable deviations to trigger that. Looking ahead, the US PCE price index tomorrow shouldn’t change much given that the market can estimate the data from the CPI and PPI reports.

The major event is of course the NFP report next Friday. That’s going to influence expectations greatly although the market could start to position into the report based on other data like claims, ISM PMIs and especially the ADP report.