After nfp, rates market turns more dovish in hike expectations

After U.S. payroll disappointed on Friday, with just 160,000 job gains, rate market became more dovish in their expectations and that to such extent that market was at point pricing no rate hike this year but next. It has however recovered from that trough but still dovish compared to pre-nonfarm.

After, Friday’s payroll, many prominent investment banks, such as, Goldman Sachs has given up in June and many revised their outlook from two hikes to one. However some the industry such as former Pimco chief Bill Gross, Mohammad El-Arian says two hike are still reasonable. New York FED president Dudley has also said that two hikes reasonable, even after Friday’s payroll.

Market is now attaching 91% probability that there won’t be a hike in June, compared to 89% before the meeting.

 

Market is attaching 73% probability that there won’t be a hike in July, compared to 72% before.

 

Before FOMC market was pricing 57% chance of no hike in September, now it’s pricing 62% odds, that there won’t be one.

Market is now pricing just one hike this year in December and that is also marginally by 58%.

Dollar index is currently trading at 94.04, down -4.6% YTD.