After digesting data and announcements, investors thought long and concluded that we are close to the end of the rate hike cycle and read it as a positive sign to be happy. The question now is, how long can this optimism last? Fed forecast for the terminal rate ending at 5.1% suggests just one more […]
After a 50 bps rate hike in January, while we had some signs of lowering inflation and slower economic growth, some economists supported ending the rate hike cycle. However, Wednesday’s published inflation numbers changed the market sentiment, and now we have even some whispers about a 50 bps hike. The Bank of England’s (BoE) policy […]
The two-day meeting of the Federal Reserve started on Tuesday. At the same time, important questions have occupied the mind, like will the recent banking collapse affect the policymakers’ decisions, and how many more hikes will we have? And so on. The last FOMC meeting concluded on February 1, where analysts believe that results were […]
Recently seen banking crises, increased market uncertainties, and changed the analysts’ market outlook. Some analysts now believe that central banks will not need to try to cool down the economy, and it has enough reason to slow down, especially with the fear of banking bankruptcy. Nevertheless, ahead of next week’s Fed meeting, ECB had no […]
While on Thursday, March 16, eyes will be on the ECB interest rate decision, and we are waiting for a 50 bps rate hike, I must emphasize that the liquidity position of the Eurozone banking sector appears to have improved in recent years, suggesting more of a balance between banks’ deposits base and loans extended […]
After banking concerns and the fear of its rapid spread to other sectors, some market participants thought Fed might stop its interest rate hikes. Still, this feeling was short-lived, as inflation numbers showed continuing rate hike concerns. Therefore, a 25 basis point rate hike is again most likely predicted. February CPI numbers showed that the […]
While we are waiting for NFP numbers on Friday, in recent days, market participants have been following the ADP and JOLTs data and Mr. Powell’s semi-annual monetary policy testimony to the Senate Finance Committee. On Tuesday and Wednesday, Mr. Powell answered the questions in the Senate. Mainly he emphasized inflation and the labor market. He […]
After the US bond yields rose today, German Bund Yields also raised to 2.58% and now trading at a 12-year high. Since market participants know the German 10-year bond as the risk-free reference asset for the Eurozone, this can be read as a long-term high inflation signal in the whole of Europe. Especially after that, […]
Last week most markets closed lower, and US 10-year bond Yields rose towards 4%, while this week, eyes will be on EU inflation numbers. Last Friday, the January US core PCE price index recorded 4.7% year-on-year, above the 4.3% market estimate and 4.6% in December. On the monthly scale, prices rose by 0.6%, exceeding market […]
The upside risk of inflation is clearly seen in last night’s published minutes. FOMC members are seeking another 50-bps rate hike in the next meeting, and strong economic and Job data give the Fed more headroom to keep raising interest rates. These conditions make a stronger USD and continuing pressure on stock markets more likely. […]
Reserve Bank of New Zealand will hold its first monetary policy meeting this year on February 22. In its last meeting in November 2022, with a 75bp rate increase, Central Bank in New Zealand raised its primary interest rate to 4.25%. With a significant upward revision to the Official Cash Rate (OCR), it reacted to […]
Before investigating the US inflation effects on financial markets, reviewing the numbers in more detail would be better. According to the US Bureau of Labor Statistics, the US consumer inflation in January raised 6.4% year-on-year. This decline from 6.5% in December, the seventh consecutive month of fall and the smallest increase since October 2021, is […]
Ahead of NFP data, let us review other important labor market numbers that we have had this week. JOLTs’ Job Openings on Wednesday were the first data we had; it showed an increase in the number of unfilled vacancies. December JOLTs openings raised again to 11.012M from 10.449M in November. Then on Thursday, we had […]
BoE will acknowledge that high inflation could be prolonged. Compared to other central banks, policymakers in BoE’s MPC have the most disagreements with each other. While MPC members are divided into three groups, and one part believes that current interest rates are good enough to control inflation, market participants still believe that on Thursday, February […]
Euro stock markets can still have difficult days in the following weeks. While the ECB policy meeting and interest rate decision will be held on Thursday, February 2, the Eurozone economy has improved amid a warm winter and sufficient natural gas reserves. However, still, it is far from what it has to be. While improving […]
The hope of a faster inflation reduction can be an illusion. Federal Reserve Open Markets Committee will end its 2023’s first meeting on Wednesday, February 1. Recently published economic data were mixed; inflation progress has been encouraging, but the labor market is still strong, which means members will have a hard job making decisions. While […]
PMI and other economic data show that economic activities have decreased in recent months. At the same time, we cannot see the direct reflection of these data on the Labor market, which likely means that we will have a delayed response than saying the economic condition is good. While Wednesday’s published JOLTs Job Openings for […]
Bank of Japan (BoJ) started its two-day meeting today, and tomorrow, Tuesday, December 20, will publish its announcement. The consensus expectation is that the central bank will maintain its current policies, holding the -0.1% target for short-term rates and a 0% cap for the 10-year bond yield under its yield curve control (YCC) policy. Consensus […]
While Federal Reserve FOMC released hawkish hints, especially in its rate hikes and inflation estimates, ECB also noted that its policies are becoming tight. Like Fed and BoE, the European Central Bank also raised its key rate from 1.5% to 2% with a smaller rate hike. However, the hawkish stance is seen in its plan […]
BoE is due to raise the rates for the ninth consecutive meeting later today. The consensus estimate is another 50 bps hike. However, it is expected to see more disagreements between MPC members, which would be the leading market driver, as the market already priced in the 50 basis points rate hike. BoE also has […]
