Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
South Korea Raises Interest Rates to 2.75% as Inflation and Weak Won Drive Tightening 
BOJ Minutes Signal More Rate Hikes as Inflation Risks Grow 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Singapore Central Bank’s Exchange Rate Policy Explained: Why MAS Uses the S$NEER Instead of Interest Rates 
China Holds Loan Prime Rates Steady for 14th Month as Economic Recovery Remains Uneven 
Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
FOMC increased interest rates in March and maintained its forecast for three rate hikes in 2018. FOMC also forecasted a faster pace of hikes next year than previously forecasted. March decision was unanimous. Current Federal funds rate - 150-175 bps (Note, all calculations are based on data as of 14th May)
- June 2018 meeting: Market is attaching 7.5 percent probability that rates will be at 1.50-1.75 percent, and 92.5 percent probability that rates will be at 1.75-2.00 percent.
- August 2018 meeting: Market is attaching 7.2 percent probability that rates will be at 1.50-1.75 percent, 89.1 percent probability that rates will be at 1.75-2.00 percent, and 3.7 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 2.5 percent probability that rates will be at 1.50-1.75 percent, 36 percent probability that rates will be at 1.75-2.00 percent, 59 percent probability that rates will be at 2.00-2.25 percent, and 2.4 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 2.3 percent probability that rates will be at 1.50-1.75 percent, 33.4 percent probability that rates will be at 1.75-2.00 percent, 57.2 percent probability that rates will be at 2.00-2.25 percent, 6.8 percent probability that rates will be at 2.25-2.50 percent, and 0.2 percent probability that rates will be at 2.50-2.75 percent.
- December 2018 meeting: Market is attaching 1 percent probability that rates will be at 1.50-1.75 percent, 16.3 percent probability that rates will be at 1.75-2.00 percent, 44.1 percent probability that rates will be at 2.00-2.25 percent, 34.6 percent probability that rates will be at 2.25-2.50 percent, and 3.8 percent probability that rates will be at 2.50-2.75 percent, and 0.1 percent probability that rates will be at 2.75-3.00 percent.
- January 2019 meeting: Market is attaching 1 percent probability that rates will be at 1.50-1.75 percent, 15.3 percent probability that rates will be at 1.75-2.00 percent, 42.3 percent probability that rates will be at 2.00-2.25 percent, 35.2 percent probability that rates will be at 2.25-2.50 percent, and 5.8 percent probability that rates will be at 2.50-2.75 percent, and 0.3 percent probability that rates will be at 2.75-3.00 percent.
The probability is suggesting,
- Since our last review a week ago, the probability has eased for both near month and far months.
- Next hike is priced in June with 92.5 percent probability, instead of 95 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 61.4 percent probability compared to 83.3 percent a week ago.
- The market is pricing the fourth hike in December with 38.5 percent probability instead of 53 percent probability just a week ago.
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