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🏦📊Interest Rate Probabilities: USD Implied Rates Step Up

**As seen in Macro Walk report 09/23/22,

  • Last week we saw the Riksbank move by 100bps, both Fed and SNB hiked rates by 75bps, the BoE and Norges Bank raised the policy rates by 50bps

  • Swaps priced in less of a move from the Fed as policy is being front-loaded, however, the implied rate was taken higher

  • The tenor for the May 2023 Fed meeting is now pricing a rate closer to 4.75%, up from 4.4% seen the prior week. Around this time, USD rates are seen peaking, the USD implied curve helps for visual guidance

  • Euro and sterling swaps remain as the most aggressive in our tracking list. Just this morning, traders have priced in an additional 200 basis points of tightening from the BoE by November as the market continues to expect the central bank would come and intervene in the recent market turmoil

  • Ahead, we will be hearing from the RBA and RBNZ during the first week of October. Swaps price in for an additional 100bps of tightening from both central banks, kiwi rates are expected to peak somewhere close to 5.0% by the middle of 2023.



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