Jerome Says Slower, But Higher

Jerome Powell abated the latest risk rally yesterday, saying that the rate hikes will slow down, but the levels will go higher. Equities sold off, the yields jumped, the dollar gained, and hopes of seeing the end of the market turmoil got completely dashed. I told you …that Jerome Powell wouldn’t let a rally in […]

More Rate Hikes Coming

Equity markets are coming under some pressure on Thursday, with Asia mostly in the red and Europe poised to open almost a percentage point lower. Chinese stocks are among the worst hit after the National Health Commission sought to quash rumours on social media that the country is studying ways to exit Covid-zero. That sparked […]

We Now Assume the Peak to be Well Above 5%

Markets The Fed yesterday raised rates by the expected 75 bps to 3.75-4%. That brings the policy rate further in restrictive territory, meaning that it actively dampens the economy and over time should cool inflation. Further hikes are coming but the statement hinted that this would most likely be at a slower pace (50 bps). […]

GBP/USD Plunges on Powell, BOE Warning

The British pound is sharply lower today. In the European session, GBP/USD is trading at 1.179, down 1.83%. It has been a dreadful week for the pound, which has declined by 3.7%. Bank of England delivers 75 bp hike The Bank of England delivered as advertised, raising rates by a super-size 75 basis points today […]

Bank of England Delivers Jumbo Hike, Hints at Smaller Moves Ahead

Summary The Bank of England (BoE) raised its policy rate aggressively at today monetary policy announcement, raising its Bank rate by 75 basis points to 3.00%. However, there were also signals from the BoE that the pace of tightening will likely slow going forward. First, while all policymakers voted to raise interest rates, the size […]

US Oct NFP To Give Fed Plenty of Room To Hike

The US labor market has taken a bit of a back seat as the Fed focuses everything on getting inflation down. But, that might be about to change. There are some signs that traders need to be aware of for when the Fed might suddenly return to worrying about its second mandate. This is particularly […]

Can Nonfarm Payrolls Add Momentum to the US Dollar?

With the Fed meeting out of the way, investors will turn to the latest US employment report that is out at 12:30 GMT Friday. Economists expect another solid nonfarm payrolls print, although there is some scope for disappointment according to business surveys. As for the dollar, while the outlook remains positive, we seem to be […]

Sunset Market Commentary

Markets After the Fed, the spotlights redirected to the Bank of England. The central bank voted in a 7-2 decision to raise rates by 75 bps to 3%. The two defectors voted either for a 50 bps or 25 bps move. Its new forecasts are not yet calibrated to the formal medium-term fiscal statement (due […]

Bank of England Review: A One-off 75bp Hike

Bank of England Review: A One-off 75bp Hike In line with our expectation, the BoE today hiked policy rates by 75bp, bringing the Bank Rate to 3.00%. We expect fiscal tightening and recession to weigh on the economy, which in our view, supports a slower hiking pace going forward. We maintain our call for a […]

RBA's SoMP Lowers Growth Outlook, But Inflation Forecasts are Troubling

The Reserve Bank has released its November Statement on Monetary Policy (SoMP). The highlight of these Statements is the Bank’s revised forecasts for growth, unemployment and inflation. These forecasts are based on a path for the cash rate broadly in line with expectations derived from surveys of professional economists and financial market pricing (most likely […]