Inflation-wary US rate options market cautiously prices for 2024 Fed hike

  • 📰 SaltWire Network
  • ⏱ Reading Time:
  • 55 sec. here
  • 2 min. at publisher
  • 📊 Quality Score:
  • News: 25%
  • Publisher: 63%

United Kingdom News News

United Kingdom United Kingdom Latest News,United Kingdom United Kingdom Headlines

Explore stories from Atlantic Canada.

Two accused teenagers to remain in custody for at least two more weeks | SaltWire #newsupdate #newsNEW YORK - Options on Secured Overnight Financing Rate futures are showing a higher probability that the Federal Reserve could hike interest rates a quarter percentage point this year and next as U.S. inflation and the labor market remain resilient.

Analysts said it would take a full-blown re-acceleration in inflation for the Fed to tighten again. That is not the baseline scenario for most economists. "If you look purely at the data and you did not have the rhetoric coming from central banks, we would be pricing in hikes, not cuts," said Akshay Singal, head of short-term interest rate trading at Citi.

The prospect of a no-cut scenario for 2024 is 31%, up from 20% a month ago, BNP Paribas data showed. Chances of the first 25-bp hike in 2025 are at 22%. Volume though is typically thin the further out the curve so that number can change. "There's a very high threshold to price a shift in Fed policy," said Bruno Braizinha, rates strategist at BofA Securities."U.S. data needs to improve by a lot for the market to abandon rate cuts and transition to pricing hikes."

Implied vol is a gauge of how much the option market believes rate swaps will move in either direction over a given time frame. The higher the vol, the greater the perceived instability over a given period.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 45. in UK

United Kingdom United Kingdom Latest News, United Kingdom United Kingdom Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Inflation-wary US rate options market cautiously prices for 2024 Fed hikeOptions on Secured Overnight Financing Rate (SOFR) futures are showing a higher probability that the Federal Reserve could hike interest rates a quarter...
Source: YahooFinanceCA - 🏆 47. / 63 Read more »