Federal Reserve: Guidance and yield curve pricing – Rabobank
Rabobank’s Global Daily notes that US Treasury yields continued a bear-flattening move ahead of the FOMC, with OIS pricing showing almost no chance of a hike at this meeting. Markets still discount nearly one full hike by December and another by Q3 next year.
Rabobank's Global Daily notes indicate that US Treasury yields have been experiencing a bear-flattening trend prior to the Federal Open Market Committee (FOMC) meeting. OIS pricing currently shows a negligible chance of a rate hike during this meeting. Markets, however, still anticipate a hike by December and another by Q3 next year.
Rabobank's Philip Marey forecasts a hold during the October meeting, followed by an interest rate hike in December, maintaining rates at 4.25% through the end of 2027. US Treasury yields have been displaying a bear flattening pattern lately, continuing the pattern observed earlier this month, in anticipation of the FOMC meeting.
Implied pricing on the OIS curve suggests the probability of a rate hike is virtually non-existent, with only around 1.7 basis points priced in. However, all eyes will be on Kevin Warsh's fourth press conference as the Federal Reserve Chair, as well as the forward guidance provided. The market's expectation is for a hike by December, and another by Q3 next year.
Rabobank forecasts a hold during the October meeting, followed by a hike in December, and maintaining rates at 4.25% through the end of 2027.
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Also reported by 2 other outlets
- Federal Reserve issues FOMC statement federalreserve.gov
- Federal Reserve likely to skip rate hike despite elevated inflation koreatimes.co.kr
