What’s priced into money markets for upcoming September central bank decisions

ECB: 100% probability of a 25bp cut

Fed: 100% probability of a 25bp cut

BoE: 80% probability of a hold (20% chance of a cut)

BoJ: 99% probability of a hold (1% chance of a cut)

RBA: 92% probability of a hold (8% chance of a cut)

SNB: 100% probability of a cut

Out of all of these I think the greatest risk to current pricing is for the BoE and the SNB.

For the BoE, I think the current data should suggest a greater chance of a cut compared to the current 20% priced. Makes tomorrow’s jobs data (more so wages) and interesting one to keep on the radar.

For the SNB, the persistent strength in the CHF is a problem for the bank, and with their reluctance to use foreign reserves to stop the CHF’s strength, there is a material risk that they opt for a bigger cut of 50bp. Markets are currently 66% priced towards a 50bp cut for the September meeting.