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Fed December rate hike bets largely unchanged after US ISM data

FXStreet (Mumbai) - A sharp contraction in the US manufacturing activity as shown by the ISM data yesterday has not had any significant impact on the Fed December rate hike bets.

The probability of a 25bps rate hike at Dec 16 meeting stands largely unchanged at 75.2%, compared to the pre-ISM data level of 77%.

The two-year treasury yield, which also mimics short-term rate hike bets, eased slightly after a weak ISM data, but stays close to 5-1/2 year high of 0.958%.

The resilience may be due to the fact that the employment sub index in the ISM data ticked higher, pointing to labour market tightening. The US ADP report for November due today is also expected to show labour market strength.

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