Indian Government Bonds Seen Opening Steady Ahead of RBI Policy Decision 
Jerome Powell Warns Against Politicizing the Federal Reserve, Defends Democratic Institutions 
Fed Chair Kevin Warsh Signals Policy Overhaul as Hawkish Rate Outlook Rattles Markets 
RBA Expected to Hold Interest Rates at 4.35% as Markets Watch AUD/USD and ASX 200 
BOJ Rate Hike Expected to Boost Yen, Impact USD/JPY and Nikkei 
South Korea Central Bank Holds Interest Rates Steady Amid Inflation Concerns 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
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.
