Wind direction suddenly changes! From Europe and America to Australia, global traders are now betting on the end of the interest rate cut narrative.

From Australia, Europe to the United States, traders are increasingly betting that the global central banks' loose monetary policy pace will slow down or even completely stop. Currently, pricing in the currency markets indicates that the market expects the European Central Bank to hardly lower interest rates further, and even believes that there is about a 30% possibility of raising rates by the end of 2026. In Australia, Reserve Bank Governor Bloch ruled out the possibility of further policy easing on Tuesday, leading to pricing in interest rate swap contracts that suggest the market expects the Australian Reserve Bank to increase rates twice by the end of next year, each time by 25 basis points. Market expectations for the policy direction of the Bank of Japan are also clearly formed: traders are almost certain that the Bank of Japan will raise its benchmark interest rate by 25 basis points to 0.75% next week, and expect at least one more rate hike next year. Even in the United States, where it is widely predicted that interest rate cuts will be initiated this month, the policy outlook for 2026 is also changing. Traders currently expect the Fed to cut rates twice next year, down from the three times forecasted at the end of last month. Jim Reid, global macro research director at Deutsche Bank, pointed out in a client report, "A significant trend is that more and more markets in economies have priced in rate hikes as the next round of monetary policy trends. If the United States also enters this trend, risk asset prices and next year's overall economic outlook will undoubtedly be completely overturned." The reassessment of the market's expectations for the monetary policy path was sparked by comments from a European Central Bank official on Monday. Isabel Schnabel, a member of the ECB's Executive Board, said she is open to the idea of the next rate hike, directly increasing market bets on a rate hike by the ECB next year. The direct impact of the market's repricing is likely to be an increase in bond yields. Although bond yields in the United States, Europe, the UK, and Japan fell slightly on Tuesday, overall, bond yields in major economies have risen significantly since the beginning of the month. However, in the short term, the Federal Reserve's monetary policy decision to be announced on Wednesday local time may limit further volatility in yields. In addition, the US will also release job vacancy data for October later on Tuesday. Evelyne Gomez-Liechti, strategist at Mizuho International, said, "If the data released this time shows weakness, it may be enough to push the US dollar interest rates to recover some of the ground lost in the past few trading days."