The probability of a 25 basis point rate cut by the Federal Reserve in December is currently reported at 63%.
Jinse Finance reported that according to CME "FedWatch" data, the probability of the Federal Reserve cutting interest rates by 25 basis points in December is 63%, while the probability of keeping rates unchanged is 37%.
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Deutsche Bank: After the three major central banks hiked rates simultaneously, the market may once again underestimate the terminal interest rate
Deutsche Bank points out that as central banks in the US, Europe, and Japan are tightening policy simultaneously, the market may still be underpricing the eventual terminal rates. With oil prices remaining high, inflation may spill over into core inflation and wages. Moreover, financial conditions have not tightened in tandem, which could weaken the effect of rate hikes. Citing the experience of 2022, Deutsche Bank notes that the market then expected a total of around 200 basis points of Fed rate hikes in the first year, but the final figure exceeded 400 basis points, illustrating that the market often underestimates the terminal rate.
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