This morning’s PMIs – full of recessionary indications, forward-looking pessimism, and deflationary signals – appear to have been the straw that broke the camel’s back of hawkish expectations. Rate-hike expectations have tumbled notably and subsequent rate-cuts are hovering at 75bps…
Source: Bloomberg
Specifically, the odds of 75bps rate-hikes in July and September are sliding fast (68% and 22% respectively now) and for December and February the odds of a single 25bps hike are evaporating…Simply put, the market appears to be pricing the end of this rate-hike cycle ahead of the MidTerms.
Source: Bloomberg
This ‘dovish’ shift has sent the 10Y yield tumbling back towards 3.00% – erasing all of the post-CPI spike…
