FOMC Hikes Policy Rate by 25 Basis Points, Signals More to Come

The Federal Reserve Open Market Committee (FOMC) lifted the federal funds rate to the 4.5% to 4.75% range and will continue its balance sheet runoff. The Fed kept its characterization of growth and the labor market unchanged – growth is modest and job gains have been robust. But, it updated its language on inflation to […]

FOMC Hikes Rates and Signals Yet More to Come

Summary As universally expected, the FOMC raised its target range for the federal funds rate by 25 bps at the conclusion of its policy meeting today. But the tightening cycle likely is not over yet as the FOMC noted that it “anticipates that ongoing increases in the target range will be appropriate.” The FOMC said […]

An End to the Tightening Cycle is on the FOMC's Horizon

While rates are likely to remain at peak to end-2023 to guard against inflation risks, this FOMC hiking is nearing an end. At their January meeting, the FOMC returned to its customary pace of tightening following 2022’s extraordinary moves, increasing the fed funds rate by 25bps to a mid-point of 4.625%. Also as anticipated, the […]

Tighter Monetary Policy – Lower Bond Yields

Market movers today While markets found Powell’s comments to be on the dovish side yesterday, we expect Lagarde to strike a more hawkish tone today and guide the market towards further hikes in the spring, as the ECB is widely expected to hike its policy rates by 50bp. See our full ECB Preview (26 January). […]

One Phrase Is All It Takes

‘It is gratifying to see the disinflationary process now getting underway’ said the Federal Reserve (Fed) President Jerome Powell at his press conference yesterday. ‘Disinflation process is getting underway’ That was the major – and the only take – of his speech yesterday, and sent the markets rallying. The US yields fell, the S&P500 reversed […]

US GDP Likely Continued to Grow in Q4

Market movers today In the US, GDP figures for Q4 2022 are on the agenda today, where we look for growth of 2.8% q/q AR. It’s worth noting though, that the relatively high figure largely reflects fairly strong October activity and the continuing positive contribution from net exports, while December data and most leading indicators […]

S&P 500 Rally Suggests Falling Recession Odds – Earnings Could Change that

The S&P 500 was flat yesterday, as investors tried to make sense of the deluge of company earnings that hit the fan before, during and after the session. Microsoft didn’t gain on better-than-expected earnings, and Tesla announced record profits, but the share price jumped only 5% in the afterhours. We are apparently stepping into a […]

Can US Q4 GDP Break the Recession Narrative?

Amidst all the debate of whether the US is heading into a recession this year, we get the first look at last year’s GDP figures. This could be the biggest market moving event of the week, especially if expectations are not met. And there is something of a wide range of forecasts. The Fed’s GDPNow […]

Goldilocks Scenario Might Sustain ST Resilience of Equities, Soft Yields and Weaker Dollar

Markets Eco data were few yesterday and the outcome only gave limited directional guidance for global trading. German IFO business confidence (business climate rising from 88.6 to 90.2; expectations gaining from 83.2 to 86.4) confirmed the message from Tuesday’s PMI’s. A recession will probably be avoided and prospects for later this year are better than […]

Can US Data Bring Back Risk Appetite

But corporate reports were providing investors with plenty of reason to pause. Microsoft was one of the larger firms to contribute to pessimism, as it reported slower growth in its enterprise software division. That implies that many companies were cutting back spending, and weren’t seeing the need to expand. The slowing economy narrative weakens the […]