Weekly Focus

Next week has a very busy central bank schedule. We expect no changes at the FOMC meeting but will look for clues about the timing of rate cuts and the end game for QT. We could also be in for an unusual couple of days with a Bank of Japan rate hike followed by an SNB cut two days later. While we expect the BoJ to hold the horses until April, we do expect a cut from the SNB. Both are close calls, though.

Fed preview

We do not expect the Fed to make monetary policy changes in its March meeting, as broadly anticipated by both markets and consensus.

BoJ Hike in Sight – But No Reason to Rush

We think the BoJ is almost ready to hike the interest rate to zero and dismantle yield curve control. However, we see no reason to rush and expect them to stay on hold at the March meeting ending Tuesday, but it is admittedly a close call

Bank of England Preview

We expect the Bank of England (BoE) to keep the Bank Rate unchanged at 5.25% on 21 March, which is in line with consensus and current market pricing. We expect the vote split to be 7-1-1, with the majority voting for an unchanged decision, Mann voting for a hike and Dhingra voting for a cut. Note, this meeting will include neither updated projections nor a press conference following the release of the statement.

Fed to Keep Rates Unchanged for a Fifth Meeting Even as Inflation Risks Lurk

The U.S. Federal Reserve is widely expected to stand pat on the fed funds range for a fifth consecutive meeting on Wednesday. But any shift in the monetary policy statement language will be closely watched after two straight months of upside surprises on inflation.

Weekly Economic & Financial Commentary: FOMC Likely on Hold Until Summer

Very few observers, ourselves included, look for a policy change at next week's FOMC meeting. Indeed, recent data have reduced the odds that the Committee will cut rates at its next meeting on May 1. Accordingly, we have pushed out our expectation of the commencement of the easing cycle to June 12.

The Weekly Bottom Line: Sticky Prices Could Delay Rate Cuts

The key data among this week’s releases was the consumer price inflation numbers. While the headline monthly figure was in line with expectations, the details could give the Fed more to discuss in their upcoming policy meeting next week. Markets took the report in stride, with Treasury yields up a bit and the major stock indices closing the day higher after the release.

Yen Surprisingly Weakens into BoJ Decision

The yen bulls remain surprisingly reluctant to take action and the implied volatility in the yen markets remains surprisingly low compared to the levels we saw back in summer, when the Bank of Japan (BoJ) decided to double its target rate on JGB 10-year yield, and last December, when the BoJ was supposed to give a clearer hint on when they would exit the negative rate policy.

USD/JPY in Holding Pattern Ahead of Key BoJ Meeting

The Bank of Japan will make its rate announcement on Tuesday and there is a strong possibility that the BoJ will lift interest rates out of negative territory. This would mark a sea-change in policy as the last rate hike occurred in 2007.

Sunset Market Commentary

US Treasuries hold near last week’s sell-off lows in an uneventful trading session awaiting major central bank decisions. US yield currently trade up to 1.5 bps higher across the curve with both the US 2-yr and 10-yr yield testing the YTD highs at 4.74% and at 4.34%. German Bunds face some similar minor selling pressure (German yields up to 2 bps higher).