Markets are coming around to the idea that there will be more rate hikes to come | Forexlive
I posted these during the course of this week:
On Monday, Fed fund futures showed 85% odds that there will be no rate hike in May. But fast forward to today, and those odds have dwindled as the banking turmoil ebbs. In fact, the pricing now shows that a 25 bps rate hike is more likely (seen at ~58%) compared to odds of the Fed staying put (seen at ~42%).
What a difference five days make and to be honest, there’s not much in terms of headlines to have changed this view.
It is just pretty much markets growing a bit more confident again as the banking turmoil comes to an end and central banks are able to brush all of that aside without much impediment.
The shift in pricing here is also reflected by higher yields in the bond market, which has been steadily rising through the week.