Market Expectations for Fed Ahead of Jobs Report

The odds of a 25 bps rate hike by the Fed have fallen to 42%, with the remaining probability siding with no change in interest rates. Falling Treasury yields indicate economic discomfort and concerns about worsening data points. Markets are anticipating the end of the Fed's tightening cycle, and a poor US jobs report tomorrow might signal that rate hikes are taking a toll on the labor market and the economy. This could lead to a stronger pricing that the Fed will not hike in May, resulting in a more risk-off wave across markets.