U.S. Job Market in January Delivered Much Stronger Key Metrics with Huge NFP Upside Revisions

The January employment reports delivered much stronger key metrics than expected, nonfarm payrolls, private sector payrolls, the unemployment rate, and average hourly earnings were all stronger than expected. In particular payroll data where January non-farm payrolls came in 353K vs +180K expected and December was revised to +333K from+216K, November was revised to +173K from +164K, a combined 126,000 higher than previously reported. Updated population estimates decreased the estimated size of the civilian non-institutional population by 625,000 and the civilian … Continue reading “U.S. Job Market in January Delivered Much Stronger Key Metrics with Huge NFP Upside Revisions”

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”

Core PCE Prices in December at 6 Month Annualized 1.9%, Below Fed’s 2% Target

The core PCE Price Index, which is the Fed’s preferred inflation gauge, rose 0.2% in December (consensus 0.2%) following a 0.1% increase in November. This is the sixth month in the last seven where monthly inflation has printed at a rate equal to or below the Fed’s 2% target. The PCE Price Index rose 0.2% in December (Briefing.com consensus 0.2%) following a 0.1% decline in November. With the December changes, the PCE Price Index was up 2.6% year-over-year, unchanged from … Continue reading “Core PCE Prices in December at 6 Month Annualized 1.9%, Below Fed’s 2% Target”

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”

Central Bank of Turkey Raises Another 250 bps to 45%, Signaled End of Rate Hikes

The Central Bank of Turkey hiked by another 250bps from 42.5 percent to 45 percent as expected. It also signaled the end of rate hikes by stating “that the monetary tightness required to establish the disinflation course is achieved and that this level will be maintained as long as needed.” This was consistent with expectations this would be the final hike after the central bank said at its last decision in December that the goal was to “complete the tightening … Continue reading “Central Bank of Turkey Raises Another 250 bps to 45%, Signaled End of Rate Hikes”

Norway’s Norges Bank Keeps Rates at 4.50%, Guides ‘On Hold for Some Time’

Norway’s central bank, the Norges Bank’s Monetary Policy and Financial Stability Committee kept rates at 4.50% at its January Meeting. The bank has borrowing costs that are the highest level since December 2008 as it sought to combat persistent inflation. Norges Bank guided it would stay on hold for “some time.” It dropped reference to how “the policy rate will lie around 4.5% until autumn 2024” which could be meaningful, or it could just be a reflection of the fact … Continue reading “Norway’s Norges Bank Keeps Rates at 4.50%, Guides ‘On Hold for Some Time’”

Bank of Canada Holds Rates at 5.00%, Focused on Wage Growth Despite Growth Concerns

Bank of Canada held its overnight rate to 5.00% in January 2023 as largely expected by markets, following up the no change from the previous meetings. The market was pricing in a 15% chance of a rate cut. BOC said, “still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation” Of note the BOC statement no longer says it “remains prepared to raise the policy rate further if needed.” “Labour market conditions have eased, with … Continue reading “Bank of Canada Holds Rates at 5.00%, Focused on Wage Growth Despite Growth Concerns”

Bank of Japan Maintains Status Quo, Core Inflation Forecasts Trimmed

The Bank of Japan at its January monetary policy meeting maintained existing policy as widely expected. The BoJ kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield unanimously. Previously the BoJ adjusted the settings by shifting the hard ceiling from 0.50% to 1.00% in the yield curve control band of +/- 0.50%. No change to core-core inflation forecasts, but core inflation forecasts were trimmed. Bank of Japan Governor Ueda’s press conference dis … Continue reading “Bank of Japan Maintains Status Quo, Core Inflation Forecasts Trimmed”