While the bond market is pricing in a 50:50 chance of an Australian interest rate cut in November, it’s still all-in on December as the global easing campaign intensifies
Already a subscriber?Traders have modestly trimmed bets of some rate relief in Australia this year, after employment data blew past forecasts which supported the Reserve Bank’s case to keep policy on hold.
Indeed, employment climbed 58,200 in July from June, well beyond forecasts of 20,000, though the jobless rate ticked slightly higher to 4.2 per cent as the participation rate jumped to a record high. Others are not so sure. Justin Tyler, founding partner of Daintree Capital, argues the report suggests the labour market is slowly weakening and the question for the RBA will be “whether it is doing so quickly enough to enable relief of inflationary pressures”.
The Fed has all but guaranteed it will lower interest rates at its next policy decider in September, as long as the pace of inflation declines in line with expectations, and jobs and economic growth remain stable.Markets are fully priced for the Fed to move by September, though debate is shifting to whether it will be a standard 0.25 of a percentage point move lower or an outsized 0.50 of a percentage point cut. Traders are still pricing in a 36 per cent chance of a larger move.
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