LONDON (MNI) – MNI PINCH calculate probability of rates rising in the US
have moved modestly higher following newswire reports of Trump being impressed
by Taylor’s interview, with markets pricing in two rate hikes by September 2018.
Rates have ticked lower in the UK though as markets interpreted BoE Governor
Carneys comments as marginally dovish. While in the Eurozone talk of ECB
announcing lower but for longer QE has led to the curve flattening even further.

FED: MNI PINCH still see the markets pricing in no chance of a 25bp rate hike at
its Nov 1 meeting, however the chance of a rate hike in December has risen to 82%
from 74% since the close of business Friday. Further out, the chance of another
25bp rate hike in June 2018 is now 67.5% up from 48% while market price another
full 25bp rate hike in September 2018.

ECB: In the Eurozone rumours that the ECB could extend QE for longer at
lower amounts so that rates remain unchanged for longer, has reduced the
probabilities of rates being hiked this year and next. MNI PINCH sees markets
pricing a 6% chance of 10bp deposit rate hike in March 2018 down from 7% seen at
close of business Friday, while, in September 2018 it has dropped to 18% chance
of a rate hike from 24%.

BoE: Chances of a rate hike in the UK for the November MPC has ticked lower
to 84.5% from 87% since the close of business Friday according to MNI PINCH
calculations. The markets still continue to price in a very high chance that
interest rates will be raised a second time to 0.75% by August 2018, unchanged
from last week, however chance of a 2nd hike in February or May have ticked
lower to 29% and 69.5% from 33.5% and 78% respectively.

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