Fed Hike Odds Jump to 64% From Coin Toss as Payrolls Test Looms
Traders that put the odds of a U.S. interest-rate increase in 2016 at no better than a coin toss last week now see the chances at almost two-in-three after a string of strong economic data.
As a crucial test looms Friday with the release of monthly payrolls report, Treasuries are headed for their worst week since mid-July after reports showed the fastest expansion in services companies in almost a year and a rebound in manufacturing. Two-year Treasury yields, which are more sensitive to the outlook for monetary policy than longer tenors, reached a four-month high. Yields on 10-year notes were set to cap a five-day advance as the pound’s steepest drop since the Brexit vote spurred demand for safer assets.
IMF warns U.S. rate hike could disrupt Asian capital flows
A disorderly reaction to possible U.S. interest rate hikes could disrupt capital flows and heighten asset price volatility in Asia, the International Monetary Fund said on Thursday.
The IMF urged Asian economies to ensure their currency rates move flexibly. But it said foreign-exchange intervention should be considered if rapid moves threaten financial stability.
"Foreign exchange intervention could also be considered if rapid exchange rate movements are the result of illiquid or one-sided markets," the report said.
Oil curves move above $50 as financial confidence in crude rises
Crude oil rose 0.5 percent to a four-month high of $50.69 a barrel in New York, extending this week’s rally to more than 5 percent. U.S. stockpiles shrank below500 million barrels last week for the first time since January and the Organization of Petroleum Exporting Countries pledged to cut production. The group will be joined by non-OPEC Russia for talks in Istanbul next week regarding the implementation of output reductions.
Reference: Reuters, Bloomberg
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