Data from the swaps market implies participants expect to see policy rates unchanged after the Federal Open Markets Committee (FOMC) meeting this week.
Looking further ahead, a 10% chance of a cut, or about 2.5 basis points of the 25 is predicted for June. The data, from multi-asset market operator TradeWeb, also recorded expectations of a 20% chance of cuts in July.
The swaps market is pricing a 40% chance of a 25bp cut in September; in November and December, the swaps market predicts a 28% and 38% chance of a 25bps cut respectively.
Overall, a cumulative basis point reduction of 35 bps or less is anticipated by the end of the year.
Angus McDiarmid, head of European interest rate derivatives at Tradeweb, said: “According to Tradeweb data, the swaps market expects the FOMC to leave rates unchanged at tomorrow’s committee meeting. It appears the swaps market has backtracked on previous predictions, now giving just a 10% chance of a 25 bps rate cut in June and less than 35 bps of cuts in total priced until the end of this year.”
©Markets Media Europe 2024
