Federal Reserve Confirmed Not in a Rush to Ease Rates at FOMC

The Federal Reserve kept rates unchanged in a target range of 5.25-5.50% in unanimous vote at their May FOMC, which was expected. Fed Chair Powell calmed fears during his press conference where he stated that it was “unlikely that the next policy rate move will be a hike.” The Fed tweaked their statement to recognize “the lack of further progress toward the 2% inflation objective” and to signal the QT tapering on Treasuries from $60 billion to $25 billion ($30 … Continue reading “Federal Reserve Confirmed Not in a Rush to Ease Rates at FOMC”

ECB Keeps Rates on Hold but Signals Summer Rate Cut

The European Central Bank (ECB) left all monetary policy settings unchanged, as was widely expected. The consensus forecast is for a 25bps cut by the ECB at its June 6th meeting and an additional 75bps in easing through the remainder of the year. The ECB has proclaimed it is watching inflation and wages data over the next eight weeks before beginning its easing cycle. Chief Lagarde said the ECB does not want to ‘pre-commit’ to a rate path (even after … Continue reading “ECB Keeps Rates on Hold but Signals Summer Rate Cut”

Abundant Marketplace Liquidity and Easy Credit Availability – Bond Market Review

Friday saw a repeat for U.S. Treasuries closing out the week on a sharply lower note, yields on the 10-yr note and shorter tenors went their highest closing levels since mid-December while the long bond outperformed, keeping its yield three basis points below its highest close from last month. We saw the same last Friday with yields coming off their lowest levels of the year after the red-hot January jobs report showed headline growth of 353,000, twice as high consensus. … Continue reading “Abundant Marketplace Liquidity and Easy Credit Availability – Bond Market Review”

Reserve Bank of Australia Does Not Rule Out Future Hikes

The Reserve Bank of Australia kept rates unchanged at 4.35% as widely expected by analysts, keeping rates at the highest level since May 2012. RBA Governor Bullock sounded as there was in no hurry to cut rates describing rate risks as “fairly balanced” with inflation still “too high” and said, “a further increase in interest rates cannot be ruled out.” The messaging from the RBA was “we are not ruling in anything or out anything” and “need to stay the … Continue reading “Reserve Bank of Australia Does Not Rule Out Future Hikes”

Focus on Powell, Fed Loan Survey and RBA Interest Rate

The week was surprised by a more hawkish Federal Reserve chair this week over rate guidance and QT parameters though it barely reduced punts for rate cuts at future meetings. We get more from the Fed this week with a Powell 60 minutes interview and the Fed’s loan survey to inform on credit tightening. Also ahead is ECB inflation expectations and monetary policy decisions from Banxico, Peru, RBA, Poland. India and Thailand. There were no surprises last week from the … Continue reading “Focus on Powell, Fed Loan Survey and RBA Interest Rate”

Rates React to Fed and Strong Jobs – Bond Market Review

U.S. Treasuries closed out the week on a sharply lower note, yields coming their lowest levels of the year after the red-hot January jobs report showed headline growth of 353,000, twice as high consensus. The report fed the rationale that the Fed will maintain its hawkish rhetoric. Notably Chicago Fed President Goolsbee said that the report will not influence policy in the near term, noting that the drop in the average workweek to 34.1 hours from 34.3 hours reflected weakness … Continue reading “Rates React to Fed and Strong Jobs – Bond Market Review”

Bond Traders Weekly Outlook: Treasury Refunding, FOMC Headwinds

U.S. Treasuries closed out the week lower in response to stronger than expected personal spending (actual 0.7%; consensus 0.4%) in December and Pending Home Sales for December (actual 8.3%; consensus 2.3%) giving rise to Fed officials hawkish rhetoric ahead. The selling drove the 10-yr yield back above its 50-day moving average (4.129%) while yields on 2s and 5s reversed the bulk of their declines from Thursday. This week’s action alleviated some of the pressure on the 2s10s spread, expanding it … Continue reading “Bond Traders Weekly Outlook: Treasury Refunding, FOMC Headwinds”

Central Bank Watch – Week Ahead Focus Fed, BOE, Riksbank Amid Irrational Exuberance

The coming week brings out meetings with the Federal Reserve mulling over rate guidance and QT parameters. Nothing is expected from that statement-only outcome and markets have reduced punts for rate cuts at the March 20th and May 1st meetings. We also have the Bank of England, Riksbank, Hungary and several LatAm central banks, Brazil, Chile and Columbia. They are confronted by a new round of developments such as the shipping crisis in the Middle East that injects further uncertainty … Continue reading “Central Bank Watch – Week Ahead Focus Fed, BOE, Riksbank Amid Irrational Exuberance”

South Africa Leaves Interest Rates at 8.25%, Rand Falls Rallies with Delayed Rate Cuts

The South African Reserve Bank (SARB) kept its benchmark repo interest rate at 8.25% at its January 25th, 2024, meting as widely anticipated. Rates remain at their highest since 2009. The bank highlighted the persistence of inflation risks while emphasizing a balanced evaluation of risks to medium-term growth. The SARB noted that the return of inflation to the target has been slow, despite the expected gradual moderation. Headline inflation fell for a second month to 5.1% in December from 5.5% … Continue reading “South Africa Leaves Interest Rates at 8.25%, Rand Falls Rallies with Delayed Rate Cuts”

ECB Leaves Key Interest Rates Unchanged, Short of Markets Hawkish Expectations

ECB kept key rates unchanged in its January monetary policy decision at 4.50%, multi-year highs for the third consecutive meeting, with the closely watched deposit facility rate 4.00%, in line with markets thoughts. The ECB broke their record streak of rate hikes with the pause and markets are also convinced that they aren’t going to add any more considering the state of the economy at the moment. The ECB’s Lagarde did not push back, failing to make use of Middle … Continue reading “ECB Leaves Key Interest Rates Unchanged, Short of Markets Hawkish Expectations”