28 Mar 2016
US: Only a 70% chance of one 25bps hike this year - BNZ
Research Team at BNZ, notes that the US Federal Reserve had lowered its ‘dot points’ to suggest only two further rate hikes this year, down from four previously.
Key Quotes
“This is now aligned with our own forecasts, but remains above market pricing, which sees only a 70% chance of one 25bps hike this year.
Assuming the Fed delivers (a big if), oil prices stabilize further and risk appetite remains sufficiently robust to avoid a surge in demand for ‘safe haven’ US Treasuries, we expect US 10-year yields to trade higher by year-end. We anticipate they will trade back above their December highs of around 2.30%.
This projected rise remains relatively modest, in acknowledgement of continued easing policy outside of the US. We expect as long as yields outside of the US remain close to/below zero, demand for Treasuries will prevent a harsh rise in yields.”
Key Quotes
“This is now aligned with our own forecasts, but remains above market pricing, which sees only a 70% chance of one 25bps hike this year.
Assuming the Fed delivers (a big if), oil prices stabilize further and risk appetite remains sufficiently robust to avoid a surge in demand for ‘safe haven’ US Treasuries, we expect US 10-year yields to trade higher by year-end. We anticipate they will trade back above their December highs of around 2.30%.
This projected rise remains relatively modest, in acknowledgement of continued easing policy outside of the US. We expect as long as yields outside of the US remain close to/below zero, demand for Treasuries will prevent a harsh rise in yields.”