The probability of seeing the US Federal Reserve increase its key rates from next March by a quarter point to 0.25-0.50%, is now in the majority, at 57.2%, according to data from the CME Group .
(Boursier.com) – On the bond markets, the year 2022 began Monday with tension in the interest rate markets, investors anticipating monetary tightening from the US central bank, which could take place as soon as it becomes available. meeting on March 15 and 16. Studies showing that the Omicron variant causes fewer severe forms of Covid than previous variants have reinforced the idea that the pandemic will not have a lasting impact on the global economic recovery in 2022.
The performance of T-Bond at 10 years jumped 12 basis points Monday night to rise to 1.62%, the highest in nearly 6 weeks. the yield of “30 years” US dollar also jumped 12 bps, rising above 2% (2.01%) for the first time since November 23. As to 2-year US loan rate, the most responsive to the evolution of short rates from the Fed, it evolved Monday evening at 0.77% (+4 bps), the highest for two years, at the beginning of 2020, before the Covid crisis.
The markets are counting on a quarter point hike in the fed funds rate from March
According to data compiled by CME Group reflecting futures contracts, the likelihood of the US Federal Reserve raising its key rates from next March by a quarter point to 0.25-0.50%, is now in the majority, at 57.2%, against only 26% on December 3. The probability of a hold at 0-0.25% in March has fallen to 39.5%, and there is a very low probability (3.2%) of a half point increase to 0, 5% -0.75%.
The Fed will publish the Minutes of its last meeting on December 14 and 15 on Wednesday. On this occasion, it adopted a much more “hawkish” tone, in reaction to the rise in inflation which accompanied the post-covid economic recovery.
The Fed had decided to accelerate the end of its asset purchase program, now scheduled for the end of March instead of mid-2022. In its new projections, the Fed also indicated that it planned to hike rates at least three times this year to support the recovery and curb the surge in inflation, which reached 6.8% over one year in November. in the United States, the highest since 1982!
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