PINCH UPDATE: The probability of a policy rate...>

US: PINCH UPDATE: The probability of a policy rate hike at this week's FOMC

meeting has tapered off slightly since last week, but is still largely priced

in. Looking beyond this meeting, there is much greater uncertainty over the

outlook for monetary policy in 2019. Despite the recent growth spurt, the

economic outlook is clouded by uncertainty over the global trade backdrop and

the impact of the oil market correction on inflation.  The 5-year inflation

breakeven rate has dropped sharply to 1.61% from 2.1% at the beginning of

October, with the market concomitantly scaling back rate expectations for next

year. PINCH now estimates that there is just a 53% implied probability of a

further 25bps policy rate hike by the December 2019 meeting.

For the latest PINCH estimates please see:

http://marketnews-m.objects.xtenit.com/MNI_PINCH_UPDATE.PNG