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

[usmprincess08]

@jjddww Just said it wouldn't be surprising to see them start to slow the rate hikes down. There's like a 20% chance they do. You don't need to get upset.

 

[haramis]

@usmprincess08 Some people are too emotionally invested.

 

[soccerbeth]

@usmprincess08 They have to be in line with the federal reserve

 

[homeowner]

@soccerbeth I'm expecting 0.5% too but what you said is not correct

 

[ch4dd]

@soccerbeth They don't have to be, but it is advised right now without China to prop us up.

That said, the Fed are also starting to see pressure to slow down their hikes too.

 

[usmprincess08]

@soccerbeth Why? The UK and European countries won't be. Nor China for that matter.

 

[chrism08]

@usmprincess08 I reckon you are onto it with the in-between.

A 75pc chance of 50bps and 25pc chance of a 25bps could just as easily be a 100pc chance if a 40 odd basis point rise.

Could also be a 2pc chance of a 0 or 75bps.

Who knows. We cannot really ask the market what it is collectively thinking.

USA is now well ahead and meet again before we next meet so I think it's 40 or 50.

 

[gilbertkatongo]

@jesuslover07 What happens to the value of the AuD if they go 50 basis points? Any predictions?

 

[jesuslover07]

@gilbertkatongo Since 50bs is slightly above expectations, The AUD ought to increase if they go 50.

And if they go 25, the AUD ought to decrease by about twice to three times as much as it would have increased had they gone 50

This is because interbank futures pricing implies 2-3× higher chance of 50bps, so 25bps would be twice to three times as many basis points of "surprise" as 50bps would be.

 

[justaperson1]

@jesuslover07 These probabilities seem to fluctuate quite a bit each month. These could just be the troughs for this month? The expected October hike was as low as 30 in September. You could have made the same prediction for October then, couldn’t you?

 

[human4675]

@jesuslover07 The only thing that matters is what the RBA says , markets "pricing" things is stupid to base predictions on