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 Philip Marey expects a hold in October, a hike in December, then rates on hold at 4.25% through 2027.

FOMC expectations and yield dynamics

"US Treasury yields moved in a bear flattening move yesterday, continuing the trend from earlier this month, in anticipation of today’s FOMC meeting."

TMGM талдауы: Қаржы нарығы жаңалықтары, экономикалық күнтізбе және нарықтық шолулар

"OIS curve implied pricing suggests the likelihood of a hike is pretty much off the table, with only around 1.7bp priced in, but all eyes will be on Kevin Warsh’s fourth press conference as Fed Chair, and be looking for forward guidance."

"The market has almost one full hike priced in by December of this year and another full hike by Q3 next year."

"We are forecasting a hold at the October meeting, followed by a hike in December, and then a hold at 4.25% through the end of 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)