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Fed rate hike bets dropped after US retail sales report

FXStreet (Mumbai) - The probability of a 25 basis points rate dropped across the board after the US retail sales report missed expectations on all fronts.

The latest data from the CME Fed watch states the probability of a rate hike in Oct dropped to 6% vs 8% yesterday. On similar lines Dec dropped to 30% vs 39%. However, 2015 rate hike was largely out of question heading into the report.

Moreover, markets were seeing a 42% probability of a 25 bps move in March 2016, which now has dropped to 39.3%. Meanwhile, the probability of the status quo has shifted higher from 41% to 49.4%.

Even the two-year treasury yield, which mimics rate hike bets, dropped more than five basis points.

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