FOMC Appears To Be in "Hawkish Hold" Mode

As widely expected, the FOMC decided to keep rates on hold at today's policy meeting. The decision to maintain the target range for the federal funds rate at its current level was unanimously supported by all 12 voting members of the Committee.

Solana Races Towards the Sun, Bitcoin Reaches New Heights

The cryptocurrency market rose on Wednesday, gaining fresh buying impulse after the Fed’s comments. Total market cap exceeded $1.30 trillion (+2.6% in 24 hours) and reached $1.32 trillion at the start of the day. Bitcoin surpassed $35K (+2.2%), and demand spread to leading altcoins such as XRP (+4%) or Solana (+10%).

British Pound Gets Lift from Fed and BoE Pauses

The Bank of England voted to maintain interest rates at 5.25% at today’s meeting. The pauses follow 14 straight rate increases in the current tightening cycle which began in December 2021. The move indicates that the MPC is sticking to the “Table Mountain” approach, which is essentially a “higher for longer” stance that keeps rates at elevated levels until the BoE is confident that inflation will fall back to the 2% target.

Franc May Continue to Strengthen amid Low Inflation

Today it became known about the level of inflation in Switzerland. Compared to the US, UK, and other countries, Switzerland can boast of a CPI of only 0.1%. The minimal increase in prices is due to an increase in fuel costs due to the rise in oil prices in the second half of the year. Thus, the country’s economy provides more arguments in favor of the protected harbor status.

BoE in Wait and See Mode With Wage Growth Key to Interest Rate Outlook

The Bank of England left interest rates unchanged today at 5.25%, as expected, with the vote widening slightly but remaining very close. The fact that the vote remains close highlights how uncertain the outlook remains in the view of the MPC and how, as Bailey reaffirmed in the press conference after, the risks to inflation are still to the upside.

Sunset Market Commentary

Unchanged. The Bank of England followed the European and US example and kept rates steady at 5.25%. The vote was not unanimous though, with 3 of the 9 members in favour of lifting rates 25 bps. At the heart of the decision lies a weak economy. GDP is projected to be flat in Q3 this year and to grow a negligible 0.1% in the running quarter. Both are softer than expected back in August.

Focus Turns to US Jobs Report

The main event today will be the US jobs report released an hour earlier than usual at 13:30 (CET), due to the shift to standard (winter) time. We expect jobs growth to cool back towards the pre-September trend at +180k, yet still continue to illustrate solid labour market conditions. Markets will also keep a close eye on the average hourly earnings growth, which slowed markedly through Q3.

Today's Calendar Centers Around US Payrolls and Services ISM

Today’s calendar centers around US payrolls and services ISM. Consensus expects 180k net job growth, a stable unemployment rate (3.8%), wage growth of 0.3% M/M & 4% Y/Y and the ISM ticking back from 53.6 to 53. In light of the recent bond correction, we see asymmetric risks with markets rallying (& dollar softening) on weaker or in-line data.

Euro Calm Ahead of US Nonfarm Payrolls

The euro is showing limited movement on Friday after posting strong gains a day earlier. In the European session, EUR/USD is

Research US

Bond market outlook remains blurred by high issuance, debt sustainability worries as well as uncertainty over economic outlook and inflation. We continue to forecast lower long-end yields, but less than previously.