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ING sees Fed on hold as markets price 30% odds of a hike

The call hinges on how shorter-dated yields react, with ING expecting them to rise more than longer-dated rates if financial conditions tighten.

Reported · Written up by our desk · Central Banks

ING’s Michiel Tukker expects the Federal Reserve to keep rates on hold, even though markets are pricing roughly a 30% chance of a hike ahead of the Fed’s upcoming policy decision, FXStreet reports. Any Fed outcome, he says, would likely affect US rates and spill over into global yield curves.

Tukker argues that shorter-dated yields could move higher further, particularly if the Fed takes a hawkish tilt that tightens financial conditions. At the same time, he expects longer-dated global rates to face resistance to following through if tighter conditions weigh on markets.

He adds that global investors are bracing for possible surprises around the meeting, with the probability distribution implying that either a hold or a hike could push rates around. In a scenario where a hike hits risk sentiment and curbs financial conditions, he expects the curve reaction to be especially important.

Tukker also describes a potential pattern of a flatter curve in that outcome, noting that shorter rates would be pushed up while longer rates might not keep pace. He links the reaction to broader risks, including jitters in equities tied to uncertainty around AI.

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