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Dovish bets on the Fed increase as a result of the renewed US-China trade war

Dovish bets on the Fed increase as a result of the renewed US-China trade war

Central Banks
Giuseppe Dellamotta
3 hours ago
  • Traders increased the rate cut bets on the Fed as US-China tensions weighed on growth expectations
central bank

Rate cuts by year-end

  • Fed: 48bps (98% probability of rate cut at the upcoming meeting)

2026: 120 bps

  • ECB: 2 bps (99% probability of no change at the upcoming meeting)

2026: 18 bps

  • BoE: 11 bps (85% probability of no change at the upcoming meeting)

2026: 54 bps

  • BoC: 25 bps (62% probability of rate cut at the upcoming meeting)

2026: 40 bps

  • RBA: 24 bps (60% probability of no change at the upcoming meeting)

2026: 44 bps

  • RBNZ: 24 bps (92% probability of rate cut at the upcoming meeting)

2026: 41 bps

  • SNB: 2 bps (92% probability of no change at the upcoming meeting)

2026: 13 bps

Rate hikes by year-end

  • BoJ: 12 bps (77% probability of no change at the upcoming meeting)

2026: 40 bps

*The 2026 pricing reflects the cumulative easing expected by the end of 2026, not how much easing is expected in 2026 alone.

After Trump's threat of imposing 100% tariffs on China last Friday, the market pricing turned more dovish for the Fed as traders started pricing in some growth risk.

We've also seen an increase in the dovish bets for the BoE and the RBA following the soft UK and Australian labour market reports.

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