Investors Expect Fed, ECB Rate Cuts, but in Varying Degrees.
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| Title: | Investors Expect Fed, ECB Rate Cuts, but in Varying Degrees. |
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| Authors: | CME Group |
| Source: | Benzinga. 02/16/2023. |
| Abstract: | For the moment, Euro Short-Term Rate (€STR) futures are looking a great deal like the Secured Overnight Financing Rate (SOFR) and Fed Funds Rate. What all three futures markets have in common is that after a period of dramatic tightening by the European Central Bank (ECB) and Federal Reserve (Fed), they are pricing one, or more likely two, 25-basis-point (bps) rate hike(s), to be followed by a long period of rate reduction as of this writing. In the case of SOFR, investors are pricing 200 bps of Fed rate cuts after a peak at around 5% (rates are 4.5%-4.75% currently). In the case of €STR, investors are pricing the likelihood of 75-100 bps in rate cuts after hikes of 25-50 bps in Q1 (Figure 1). [ABSTRACT FROM PUBLISHER] |
| Database: | Newspaper Source Plus |
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| Abstract: | For the moment, Euro Short-Term Rate (€STR) futures are looking a great deal like the Secured Overnight Financing Rate (SOFR) and Fed Funds Rate. What all three futures markets have in common is that after a period of dramatic tightening by the European Central Bank (ECB) and Federal Reserve (Fed), they are pricing one, or more likely two, 25-basis-point (bps) rate hike(s), to be followed by a long period of rate reduction as of this writing. In the case of SOFR, investors are pricing 200 bps of Fed rate cuts after a peak at around 5% (rates are 4.5%-4.75% currently). In the case of €STR, investors are pricing the likelihood of 75-100 bps in rate cuts after hikes of 25-50 bps in Q1 (Figure 1). [ABSTRACT FROM PUBLISHER] |
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