|
Central Bank |
Current Interest Rate |
Next Policy Decision Expectation |
Market Conviction* |
1-yr Exp** |
|
Federal Reserve |
0.00% - 0.25% |
No change on 12/14 ↔ |
High |
+30bps |
|
European Central Bank |
1.00% |
No change on 01/13 ↔ |
High |
+47bps |
|
Bank of England |
0.50% |
No change on 12/09 ↔ |
High |
+36bps |
|
Swiss National Bank |
0.25% |
No change on 12/16 ↔ |
High |
+12bps |
|
Reserve Bank of Australia |
4.50% |
No change on 02/01 ↔ |
High |
+41bps |
|
Bank of Canada |
0.75% |
No change on 01/18 ↔ |
High |
+61bps |
|
Reserve Bank of New Zealand |
3.00% |
No change on 01/27 ↔ |
High |
+65bps |
|
Bank of Japan |
0.10% |
No change on 12/21 ↔ |
High |
+2bps |
*Market Conviction is based on Overnight Index Swaps. A higher level of conviction implies a greater likelihood that the next policy decision expectation is accurate.
**Represents the number of basis points interest rates are expected to rise or fall over the next year.
Daily Update: How fast perceptions can change. Only weeks ago market observers were speculating about more easing from the major central banks, with the potential for additional rounds of quantitative easing. But as economic data becomes increasingly constructive, interest rate expectations are actually rising.
A 50 basis point spike in U.S. 10-year Treasury yields over two weeks has begun to put pressure on the front of the curve. In fact, at 30bps, we see one year interest rate expectations from the Federal Reserve at the highest levels in five months. We see similar moves in expectations for the ECB and BOE. Interestingly, at 47bps, markets are expecting more in the way of tightening from the ECB than they are from the Australian central bank.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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