Rate cuts by year-end
- Fed: 39 bps (88% probability of rate cut at the upcoming meeting)
2026: 101 bps
- ECB: 2 bps (98% probability of no change at the upcoming meeting)
2026: 9 bps
- BoE: 6 bps (92% probability of no change at the upcoming meeting)
2026: 36 bps
- BoC: 20 bps (51% probability of no change at the upcoming meeting)
2026: 34 bps
- RBA: 16 bps (94% probability of no change at the upcoming meeting)
2026: 34 bps
- RBNZ: 60 bps (81% probability of rate cut at the upcoming meeting; the rest for a 50 bps cut)
2026: 73 bps
- SNB: 2 bps (94% probability of no change at the upcoming meeting)
2026: 7 bps
Rate hikes by year-end
- BoJ: 18 bps (55% probability of rate hike at the upcoming meeting)
2026: 57 bps
*The 2026 pricing reflects the cumulative easing expected by the end of 2026, not how much easing is expected in 2026 alone.
This week was relatively light on the data front but we got two key releases that influenced interest rates expectations. The first one was the hot Australian monthly CPI report which triggered a hawkish repricing for the RBA with the market scaling back easing expectations from 30 bps by year-end to just 16 bps. Overall, the data wasn’t that hot but in the current context it doesn’t take much for the market to lean on the more hawkish side.
The second key release was the US Jobless Claims report yesterday where Initial Claims dropped substantially with also another improvement on the Continuing Claims side. That showed that the labour market might not be as weak as people think. Moreover, at the same time of the jobless claims report, we got a slate of other US data and all of them beat expectations by a big margin. This triggered a hawkish repricing for the Fed with the expected easing by year-end falling to 39 bps vs 44 bps prior and 101 bps by the end of 2026 vs 113 bps prior.
