DBS Group Research economist Eugene Leow assesses USD Rates ahead of the October FOMC meeting, noting investors see a near-even chance of a back-to-back Fed hike.

FOMC odds hinge on NFP data

"October’s FOMC meeting is treated as live with investors betting on a 47% chance of a back-to-back Fed hike. This week’s nonfarm payrolls (consensus: 90k) could well tilt the odds more decisively in either direction."

"More indicators (consistently low jobless claims and lower unemployment rates) are now showing labour market improvement compared to six months ago and this is broadly consistent with the firm PMI numbers that we saw last week."

"Our breakdown indicates that US yields are dragged up by a range of factors, most dominantly by higher Fed hike expectations and a moderate rise in inflation expectations."

"We also note the reaction of the UST curve in response to President of the NY Fed, John Williams, pushback on a back-to-back Fed hike."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.