Repricing central bank policy

AXA
By January 24, 2019 02:04

Repricing central bank policy

Rates markets monthly review

Fears of a stronger-than-anticipated global economic slowdown have recently seen biased central banks’ wording grow more cautious. In particular, the level of attention to financial conditions has risen. As a result, we’ve witnessed a spectacular re-pricing of policy expectations: The US Federal Reserve (Fed) Funds curve has flattened considerably with 20 December 2018 futures rallying by 40 ticks over the past six months (Exhibit 1). Moreover, expectations of a European Central Bank (ECB) hike have been scaled back by almost eight months. The Eonia curve currently does not imply the initial 10 basis point (bp) hike before summer 2020. 

AXA
By January 24, 2019 02:04

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