FXStreet (Bali) – The ANZ Research Team reviews Monday’s action in financial markets, underlying that market odds of a December hike still remain at high levels, just slightly under 70%.
Key Quotes
“The overnight session provided markets with the option to reassess whether the immediate post payroll price action was a fair reflection of the market outlook.”
“Judging by the mild manner of market moves, the assessment thus far appears to be ‘yes’, with Treasury yields drifting higher, the curve steepening, the USD holding at high levels, and market odds of a December hike still sitting slightly under 70%.”
“That said, global bourses were almost universally in the red overnight, and while moves were relatively modest, the fallout from the rates market to asset prices needs to be closely watched by markets and central banks alike.”
“Fed comments overnight by Evans and Rosengren were broadly on the same page as Yellen, in which a December hike was a “live possibility”, although subsequent moves would be gradual.”
“The trimming of global growth forecasts and the “deeply concerning” outlook for world trade and emerging market forecasts by the OCED was a reminder that the Fed will be swimming against the prevailing tide, and while this may not stop a December hike, it will most certainly slow the pace of tightening – something the rates market has seemingly bought into.”
(Market News Provided by FXstreet)