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U.K. rate hike expected this year

  • Short Sterling futures have priced in a 25 basis point hike in British interest rates before year-end following Mark Carney's suggestion yesterday that a rate boost could come sooner than markets expect. The market has also priced in 25 basis point boosts for each quarter of 2015.
  • Looking at U.S. rates, the long-end of the Treasury curve didn't react to Carney's unexpected hawkishness, but the short end is a different story, with the 3-year Treasury yield up 5.5 basis points to 0.952%, the highest since May 2011. Looking at Eurodollar futures, the timing of the Fed's first hike was nudged forward a bit to about April of next year.
  • ETFs: SHY, IEF, PST, IEI, TYO, DTYS, BIL, STPP, UST, SHV, TBX, VGIT, FLAT, VGSH, SCHO, GSY, ITE, DTYL, SCHR, TYD, SST, TUZ, DTUL, DTUS, TBZ, FIVZ, DFVL, DFVS, TYNS
  • The pound (FXB) continues to gain, +0.3% today to $1.6954. In their first reaction to Carney's speech, equity investors sell, with the FTSE 100 -1.1%.
  • ETFs: FXB, EWU, GBB, EWUS, FKU, DXPS, DBUK
  • Previously: Sterling spikes on hawkish Carney comments
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