Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Japan’s Rising Inflation Strengthens Case for a Near-Term BOJ Rate Hike 
Fed Officials Split as Powell Weighs December Interest Rate Cut 
Japan’s Finance Minister Signals Alignment With BOJ as Rate Hike Speculation Grows 
RBI Cuts Repo Rate to 5.25% as Inflation Cools and Growth Outlook Strengthens 
RBA Reassesses Pricing Behaviors and Policy Impact Amid Inflation Pressures 
FOMC increased interest rates in March and June and increased its forecast from three rate hikes in 2018 to four rate hikes. June decision was unanimous. Current Federal funds rate - 175-200 bps (Note, all calculations are based on data as of 13th August)
- September 2018 meeting: Market is attaching 6.4 percent probability that rates will be at 1.75-2.00 percent, and 93.6 percent probability that rates will be at 2.00-2.25 percent.
- November 2018 meeting: Market is attaching 6.4 percent probability that rates will be at 1.75-2.00 percent, 93.6 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.
- December 2018 meeting: Market is attaching 2.2 percent probability that rates will be at 1.75-2.00 percent, 36.5 percent probability that rates will be at 2.00-2.25 percent, and 61.3 percent probability that rates will be at 2.25-2.50 percent.
- January 2019 meeting: Market is attaching 2.3 percent probability that rates will be at 1.75-2.00 percent, 37.9 percent probability that rates will be at 2.00-2.25 percent, 57.2 percent probability that rates will be at 2.25-2.50 percent, and 2.5 percent probability that rates will be at 2.50-2.75 percent.
- March 2019 meeting: Market is attaching 1.2 percent probability that rates will be at 1.75-2.00 percent, 21.4 percent probability that rates will be at 2.00-2.25 percent, 48.3 percent probability that rates will be at 2.25-2.50 percent, and 27.9 percent probability that rates will be at 2.50-2.75 percent, and 1.2 percent probability that rates will be at 2.75-3.00 percent.
- May 2019 meeting: Market is attaching 1.1 percent probability that rates will be at 1.75-2.00 percent, 19.8 percent probability that rates will be at 2.00-2.25 percent, 46.1 percent probability that rates will be at 2.25-2.50 percent, and 29.6 percent probability that rates will be at 2.50-2.75 percent, and 3.4 percent probability that rates will be at 2.75-3.00 percent.
- June 2019 meeting: Market is attaching 0.7 percent probability that rates will be at 1.75-2.00 percent, 12.5 percent probability that rates will be at 2.00-2.25 percent, 35.8 percent probability that rates will be at 2.25-2.50 percent, and 35.9 percent probability that rates will be at 2.50-2.75 percent, 13.6 percent probability that rates will be at 2.75-3.00 percent, 1.4 percent probability that rates will be at 3.00-3.25 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have eased for far months.
- The market is pricing the third hike for 2018 in September and pricing it with 93.6 percent probability compared to 97.6 percent a week ago.
- The market is pricing the fourth hike of 2018 in December with 61.3 percent probability instead of 68.5 percent probability just a week ago.
- The first rate hike of 2019 is priced in June with 50.9 percent probability, instead of 59.4 percent probability just a week ago.
