Central Bank Watch – The Big Three Fed, ECB and BoE Set to Raise Rates Again

This week’s central bank main event was The Bank of Canada who hiked by 25bps to 4.50%. The Bank of Thailand raised its key interest rate by 25 basis points to 1.5%. Colombia’s BanRep hiked by 75bps but signaled the end of cycle nearing. Chile left their benchmark at 11.25% with a neutral bias. South Africa hiked the repo rate by 25bp to 7.25%. In the week ahead we get four central banks delivering policy decisions. We have the big … Continue reading “Central Bank Watch – The Big Three Fed, ECB and BoE Set to Raise Rates Again”

Bond Traders Weekly Outlook: US Treasury Auctions Outperform Ahead of FOMC

U.S. Treasuries pulled back for the second consecutive day on Friday, resulting in a mixed finish for the week. Inflation watchers saw a milder PCE as expected while Japan’s Tokyo Core CPI rose 4.4% yr/yr in January it was back on topic. The 10-yr note yield settled the week at 3.52%. The 2-yr note yield, which is most sensitive to changes in the Fed funds rate, settled at 4.21%. U.S. Treasuries completed this week’s spectacular note auctions with the $35 bln 7-yr … Continue reading “Bond Traders Weekly Outlook: US Treasury Auctions Outperform Ahead of FOMC”

Bank of Canada Hikes Rates 25 bps to Highest Level Since 2008, Signals Holding Pattern

Bank of Canada raised the target for its overnight rate by 25bps to 4.50% in January 2022, as expected. The move follows the aggressive hikes at the last four meetings. It was the eighth consecutive rate hike pushing borrowing costs to the highest level since 2008. Notably the BoC Governing Council said “If economic developments evolve broadly in line with the MPR outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative … Continue reading “Bank of Canada Hikes Rates 25 bps to Highest Level Since 2008, Signals Holding Pattern”

Central Bank Watch – Fed Tempers Rhetoric, Bank of Canada Ahead

This week’s central bank main event was The Bank of Japan who kept the status quo sending the dollar yen up 300 pips putting a bid inequities and bonds. We saw no change from the People’s Bank of China, Norges Bank, Bank Negara Malaysia Bank, and Central Bank of Turkey from their monetary policy meetings. Bank Indonesia however raised another 25bps. The Federal Reserve Biege Book was consistent with what we have seeing with economic data released, not a lot … Continue reading “Central Bank Watch – Fed Tempers Rhetoric, Bank of Canada Ahead”

Bond Traders Weekly Outlook: U.S. Treasuries Backed Off September Highs on Optimistic Chatter

U.S. Treasuries continued the move from last week through Wednesday giving back most of those gains Friday resulting in a slightly higher finish for the week in most tenors. The long bond ended negative territory for the week while the 10-yr note and shorter tenors gave back most of their gains from Wednesday’s surge that sent yields on these tenors to levels not seen since September. Together with hopeful rhetoric Treasuries and European debt faced pressure at the end of … Continue reading “Bond Traders Weekly Outlook: U.S. Treasuries Backed Off September Highs on Optimistic Chatter”

Norway Holds Interest Rate at 2.75 percent, Signaled More Hikes Ahead

Norway’s central bank, the Norges Bank’s Monetary Policy and Financial Stability Committee unanimously kept the policy benchmark interest rate at 2.75% in its January 2022 meeting, in line with market expectations, and signaled a further rate hike in the upcoming meeting.  The Committee noted that the latest inflation readings were well above the central bank’s target of 2%. said the policy rate will need to be increased somewhat further to bring inflation in line. The bank had five consecutive hikes by December, … Continue reading “Norway Holds Interest Rate at 2.75 percent, Signaled More Hikes Ahead”

Turkey Central Bank Left Interest Rates Unchanged at 9% As Lira Hits New Lows

The Central Bank of Turkey left its key one-week repo rate unchanged at 9% in its January meeting on Thursday, as expected, saying the current policy rate is adequate.  The bank had cut key interest rates in November for the fourth consecutive month. The Turkish lira held a record low of 18.8 per USD after the announcement. There has been concerted pressure from President Recep Tayyip Erdogan wanting rates cut to stimulate the economy, but the collapsed Lira and soaring … Continue reading “Turkey Central Bank Left Interest Rates Unchanged at 9% As Lira Hits New Lows”

Bank Negara Malaysia Leaves Interest Rates Unchanged to Assess Previous Hikes Impact

The central bank of Malaysia, Bank Negara Malaysia surprised markets by leaving its key overnight policy rate steady at 2.75% in the first meeting of 2023 on Thursday. Markets had forecast a 25bps increase. Bank Negara said it wants to assess the impact of the previous four rate hikes. Policymakers noted that the current policy stance remains accommodative and supportive of economic growth and further normalization would depend on the evolving conditions and their implications to the domestic inflation and growth … Continue reading “Bank Negara Malaysia Leaves Interest Rates Unchanged to Assess Previous Hikes Impact”

Bank Indonesia Raised Rates Another 25 basis points to Highest Level Since 2009

Bank Indonesia increased interest rates by 25 bps during the first meeting of 2023, a sixth consecutive hike, on Thursday as it sought to tame inflation and strengthen the rupiah exchange rate. The benchmark 7-day reverse repurchase rate now stands at 5.75%, the deposit facility at 5.00% and the lending facility at 6.50%, their highest level since 2009 and in line with market forecasts. So far since August last year the central bank has lifted rates by 225bps. Indonesia’s annual inflation rate … Continue reading “Bank Indonesia Raised Rates Another 25 basis points to Highest Level Since 2009”

Federal Reserve Beige Book Highlights Housing Markets Continued to Weaken

The Federal Reserve released its Biege Book Wednesday prepared at the Federal Reserve Bank of Cleveland based on information collected on or before January 9, 2023.  The report was consistent with what we have seeing with economic data released, not a lot has changed over the past month, the economy is weakening. It was reported housing markets continued to weaken, clearly higher interest rates have further dented home sales and household finances. Notably many retailers noted increased difficulty in passing … Continue reading “Federal Reserve Beige Book Highlights Housing Markets Continued to Weaken”