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6 May 2015
Fed lift-off still priced for Dec'15 - RBS
FXStreet (Bali) - Fed lift-off is still priced for Dec’15, notes Brian Mangwiro, Strategist at RBS, adding that anticipated pace of tightening is still uneven.
Key Quotes
"Fed lift-off is still priced for Dec’15. Last week’s sell-off in rate markets saw marginal steepening on the Eurodollar strip along with the rest of the curve (2s10s, 5s30s etc)."
"Around 4bp of hikes were added into Dec’15, and a cumulative 12bp into Dec’16. 1y1y USD was ~12bp wider (in yields) at 99bp, and that probably helped the Dollar to maintain ground vs. G-10 peers despite the liquidation of longs (going on CFTC data)."
"Anticipated pace of tightening is still uneven; almost 1x 25bp hike per quarter in 2016, and sparsing out to one hike every 6-9 months from Q2’17 onwards. The maximum amount of hikes expected in any single year is still 75bp (3x 25bp), and only between Dec’15 and Dec’16 (bottom right). Markets are priced for a gradual and uneven pace of Fed tightening."
Key Quotes
"Fed lift-off is still priced for Dec’15. Last week’s sell-off in rate markets saw marginal steepening on the Eurodollar strip along with the rest of the curve (2s10s, 5s30s etc)."
"Around 4bp of hikes were added into Dec’15, and a cumulative 12bp into Dec’16. 1y1y USD was ~12bp wider (in yields) at 99bp, and that probably helped the Dollar to maintain ground vs. G-10 peers despite the liquidation of longs (going on CFTC data)."
"Anticipated pace of tightening is still uneven; almost 1x 25bp hike per quarter in 2016, and sparsing out to one hike every 6-9 months from Q2’17 onwards. The maximum amount of hikes expected in any single year is still 75bp (3x 25bp), and only between Dec’15 and Dec’16 (bottom right). Markets are priced for a gradual and uneven pace of Fed tightening."