MNI: PINCH: Following a slight adjustment to the.....>

MNI: PINCH: Following a slight adjustment to the PINCH methodology, our

market-implied probabilities have shifted somewhat. Rate hike probabilities have

broadly shifted higher from last week in line with the equity relief rally.

- Based on our revised estimates, there is a 69.1% OIS-implied probability of a

25bps hike to the Fed funds rate in December. The recent volatility in equity

markets and uncertainty over the global economic outlook (the dataflow has been

mixed, but broadly it appears that growth has slowed) is a contributing factor

to the residual risk of the FOMC abstaining from a hike.

- EUR OIS rates are relatively volatile at the short end, which can impact

near-term probability estimates. Nonetheless, in line with most analysts, the

model pinpoints December 2019 as the date of the first depo rate hike.

-Relatively hawkish commentary during the Bank of England's post-meeting press

conference on November 1, with Governor Mark Carney hinting at a faster pace of

policy tightening under a benign Brexit scenario, has lifted the market-implied

trajectory for the bank rate. The market is fully priced for one hike in 2019.