Hike slowdown coming: Market still expecting 50bps for October, but slowing to 25bps in Nov and Dec

[cantgetright]

@jesuslover07 This is the same data that had the terminal rate at 4.35% just last week isn't it? And 3.5% about a month ago?

 

[jesuslover07]

@cantgetright Correct. Terminal rate over time is the first chart in the OP:

https://imgur.com/kHHo4J0

(the line labelled "interbank futures")

 

[billyboy]

@jesuslover07 They did say this last month also.

However, I do fear that the end is near for big rate hikes, much to the chagrin of everyone who hasn't overextended.

 

[jesuslover07]

@billyboy Yes, and they were wrong because unexpectedly high US core inflation data came in mid-September. Unexpected economic data will continue to occur in both directions which causes forecasts to be updated.

Despite that, I continue to treat the interbank futures as the best forecast we have for the ~3 months timescale. But this is always conditional on current knowledge, which cab change as economic data surprises us.

 

[steves1980]

@jesuslover07 I wouldn't say that data was unexpected, it's been pretty clear that the global debt binge of the last few years in particular was going to have some negative effects that weren't going to blow over without some pain.

I'm sure the RBA would love to stop hiking as it's looks pretty bad how rapidly they have had to rise but inflation for the moment seems to be sticking and they really can't afford to have it entrenched.

 

[jesuslover07]

@steves1980 Markets weren't expecting it, that's the sense in which it was unexpected. Of course they expected high inflation, but it came in a tad higher still.

If you know better than the markets consistently, by all means you can make a killing on said markets.

 

[bulfrek]

@jesuslover07

unexpectedly

Key word really. All these daily predictions are just noise.

 

[justme2017]

@jesuslover07 Hello everyone from an hour ago. Looks like the RBA may be a little worried and went for 25 bps sooner than the market was expecting.

 

[jesuslover07]

@justme2017 The market had this at a 30% chance, people shouldn't be surprised. 30% probable things happen all the time!

 

[justme2017]

@jesuslover07 Quite fair

 

[usmprincess08]

@jesuslover07 I wouldn't be surprised to see only 25 bps today.

Or maybe today is the perfect time for 40 BPS to cure my OCD.

 

[jidalbc]

@usmprincess08 I’m probably missing something, is the current cash rate not 2.35% - how would a 40bp rise fix your ocd?

 

[usmprincess08]

@jidalbc To move back in line with the traditional 25 BPS benchmark rates. But it doesn't really matter, just looks shit on graphs.

 

[elizecornforth]

@usmprincess08 Too soon sorry. It will be 0.5% today, almost guaranteed. Next month is more up in the air and there is a chance for both 0.5% or 0.25% depending on data.

 

[jjddww]

@usmprincess08 The RBA is not going to go with 25bp today.

Please stop this nonsense.

 

[mp83]

@jjddww /r/agedlikemilk

 

[wlandis10]

@jjddww I didn't realise you were psychic

 

[jjddww]

@wlandis10 Ok I got it completely wrong

 

[wlandis10]

@jjddww the confidence though

 

[jjddww]

@wlandis10 !remindme 4 hours