Fed rate hike is all but a sure thing in December - BNZ

Jason Wong, Currency Strategist at BNZ, notes that the market-based expectations for a Fed hike next month are sitting between 94%-100%, depending on how they are measured, meaning a rate hike is all but a sure thing.

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“Following that, the OIS market has priced in another 38bps of hikes for next year. This is below the two rate hikes the FOMC signaled as per the last set of “dot-plots” and since then the inflation outlook looks stronger post the US election. That provides some further upside potential in US bond yields at some stage, particularly at the shorter end of the curve.”