Overview
- U.S. rate futures now price a much lower chance of cuts before late summer, with Reuters citing roughly 35% odds for June and 55% by July as oil’s surge revives inflation worries.
- WTI crude has jumped more than 13% since Friday after U.S.-Israeli strikes on Iran, the Strait of Hormuz is shut to traffic, and U.S. gasoline prices rose about 10 cents a gallon in a day.
- Bank of Japan Deputy Governor Ryozo Himino said policy should gradually move toward neutral via moderate hikes, yet two-year JGB yields fell 3 bps to 1.215% as traders scaled back bets on an early move.
- RBA Governor Michele Bullock defended February’s hike to 3.85%, warned inflation expectations must stay anchored, and said a March increase is possible because “every meeting is live.”
- Bank of England policymaker Alan Taylor said it is too soon to judge the Middle East impact, and market odds of a March BoE cut fell to below 50% from nearly 80% before the oil spike.