Non-farm data strengthens expectations of a 50 basis point rate cut by the Federal Reserve and the European Central Bank

The weaker-than-expected U.S. nonfarm payrolls data was enough to prompt a larger rate cut. The market currently expects a 20% chance of a 50 basis point rate cut by the ECB at its September meeting, and a 70% chance of a 25 basis point cut in October. Swap contracts currently show that the market expects the Fed to cut rates by 50 basis points multiple times, with a 75% chance of a 50 basis point cut in September, a 60% chance of a 50 basis point cut in November, and a 15-20% chance of a 50 basis point cut in December. (Jinshi)