Federal Reserve: Yield curve pricing and policy guidance – Rabobank

With OIS pricing indicating almost no prospect of a rate rise at this FOMC meeting, Rabobank’s Global Daily reports that US Treasury yields extended their bear-flattening move ahead of the decision. Nearly one full increase is still priced in by December, followed by another by Q3 next year. Philip Marey at Rabobank forecasts unchanged rates in October and a rise in December, after which he expects rates to remain at 4.25% through 2027.

Treasury yields extend bear-flattening as markets await FOMC

"US Treasury yields moved in a bear flattening move yesterday, continuing the trend from earlier this month, in anticipation of today’s FOMC meeting."

"OIS curve implied pricing suggests the likelihood of a hike is pretty much off the table, with only around 1.7bp priced in, but all eyes will be on Kevin Warsh’s fourth press conference as Fed Chair, and be looking for forward guidance."

"The market has almost one full hike priced in by December of this year and another full hike by Q3 next year."

"We are forecasting a hold at the October meeting, followed by a hike in December, and then a hold at 4.25% through the end of 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)