The past week went as expected for central bank watchers as far as monetary policy decisions went, however Fed Chair Powell in his speech at the IMF shook the market up with regards to higher rates. The RBA hiked, Banxico held, Peru as expected cut rates. Poland’s central bank unexpectedly halted its easing cycle. Data risk is focused on global inflation and inflation expectations. In the week ahead eyes will be on what looks like an overload of Fed. BoE and ECB Governor speeches again around key data releases. The only rate decision comes from the Philippines central bank, Bangko Sentral ng Pilipinas (BSP) who resumed monetary tightening following an emergency meeting three weeks ago lifting the key rate to 6.5%.
The Treasury market continues to respond to hot geopolitical risk, hotter inflation, greater supply and credit risk. Curve shapes are being bent as the US economy continues to grow much faster than the non-inflationary speed limit and is outpacing many other major industrialized economies.
Central Bank Weekly Analysis and Outlook – Banker dynamics are complex. There are myriad facets to analyze and contemplate.
Central bank monetary policy decisions and market activity interest rate decisions can have a dominant effect on financial markets, fiscal policy and geopolitics. We keep an eye on key banker developments, what they mean and what is ahead.
In the Week Ahead
In the week ahead we have
- The Bangko Sentral ng Pilipinas (BSP) who resumed monetary tightening following an emergency meeting three weeks ago, lifting the key rate to 6.5%. Nalin Chutchotitham, Citi’s economist covering the Philippines said in a commentary that they see the BSP standing pat during the policy meeting next week, after going for an off-cycle rate hike of 0.25 percentage point that brought the benchmark interest rate to 6.5 percent. Still, Nalin said that “[s]ome risks of another hike remain as the BSP aims to better anchor inflation expectations.” She noted that the BSP reiterated preparedness for follow-through monetary policy action — as necessary — to prevent additional second-round effects. “(W)e believe Q3 GDP (third-quarter gross domestic product) data would help the BSP decide,” Nali said. “In our base case, we think the BSP could wait-and-see for a bit, after having brought forward its rate hike to October and that real policy rate is in a restrictive zone,” she added.
Previews come from Scotiabank and other sources.
To say central bankers, have issues is an understatement. Already grappling with the quickest inflation in decades they now have these decisions to make, forcefully raise borrowing costs to defend currencies and risk hurting growth, spend reserves that took years to build to intervene in foreign exchange markets, or simply stand aside and let the market play out.
Central Bank Highlights This Past Week:
Most of the G10 central banks may complete their rate hike cycles around the middle of the year or earlier, the unwinding of central bank balance sheets may continue longer, depending on the damage done.
This week’s central bank main events included:
- The Reserve Bank of Australia announced a +25bp interest rate hike, as widely expected by analysts after last month’s inflation reports. It is the RBA’s 13th cash rate hike since they began this hiking cycle in May of 2022.
- Poland’s central bank unexpectedly halted its easing cycle in the first decision since the country’s pro-European opposition, which has been critical of Governor Adam Glapinski, secured a majority in last month’s election. The move to keep the main interest rate at 5.75% defied expectations from a majority of economists, who predicted a third consecutive cut, and buoyed the zloty. It came as declining inflation remains above target and the opposition under Donald Tusk prepares to take power after eight years of nationalist rule.
Eyes on the Bond Market
US Bond Watch
U.S. Treasuries U.S. Treasuries finished the week mixed with the long bond rebounding from Thursday’s slide after its woeful auction Thursday. The offering tailed by a record 5.3 bps with the lowest bid-to-cover ratio in nearly two years and lowest indirect takedown in two years. The long bond yield settled within a basis point of its 50-day moving average (4.728%). Shorter tenors extended this week’s show of relative weakness. Reports about a ransomware attack that crippled the Industrial and Commercial Bank of China’s access to the U.S. Treasury market on Thursday was just another worry for investors. This week’s underperformance in shorter tenors compressed the 2s10s spread by 12 bps to -42 bps. Crude oil lost another $3.57, or 4.4% this week, while the U.S. Dollar Index gained 0.8% this week.
Yield Watch
Friday/Week
- 2-yr: +4 bps to 5.05% (+19 bps for the week)
- 3-yr: +5 bps to 4.82% (+21 bps for the week)
- 5-yr: +3 bps to 4.67% (+18 bps for the week)
- 10-yr: UNCH at 4.63% (+7 bps for the week)
- 30-yr: -4 bps to 4.73% (+2 bps for the week)
Highlights – Federal Reserve
- Federal Reserve Credit declined $38.8bn last week to $7.822 TN.
- Fed Credit was down $1.079 TN from the June 22nd, 2022, peak.
- Over the past 217 weeks, Fed Credit expanded $4.095 TN, or 110%.
- Fed Credit inflated $5.011 TN, or 178%, over the past 574 weeks.
- Fed holdings for foreign owners of Treasury, Agency Debt fell $7.6bn last week to $3.426 TN.
- “Custody holdings” were up $88bn, or 2.6%, y-o-y.
Fed 2023 Bank Stress Tests.
Busy Central Bank Week Ahead:
This Week’s Interest Rate Announcements (Time E.T.)
Monday, November 13, 2023
- None Seen
Tuesday, November 14, 2023
- None Seen
Wednesday, November 15, 2023
- None Seen
Thursday, November 16, 2023
- 02:00 Philippines Interest Rate Decision
Friday, November 17, 2023
- None Seen
This Week’s Central Bank Speeches, Meetings (Time E.T.)
Monday, November 13, 2023
- 03:15 ECB’s De Guindos Speaks
- 06:55 GBP BoE Breeden Speaks
- 08:50 USD Fed Governor Cook Speaks
Tuesday, November 14, 2023
- 02:45 SNB Chairman Thomas Jordan speaks
- 02:45 German Buba Mauderer Speaks
- 03:00 FOMC Member Williams Speaks
- 03:00 ECB’s Lane Speaks
- 03:45 ECB’s Enria Speaks
- 04:30 BoC Deputy Governor Gravelle Speaks
- 05:30 Fed Governor Jefferson Speaks
- 07:00 BoE MPC Member Dhingra Speaks
- 08:15 ECB’s Elderson Speaks
- 08:45 BoE MPC Member Pill Speaks
- 12:45 Fed Goolsbee Speaks
Wednesday, November 15, 2023
- 09:30 Fed Vice Chair for Supervision Barr Speaks
- 13:00 MPC Member Haskel Speaks
Thursday, November 9, 2023
- 02:00 German Buba Wuermeling Speaks
- 02:00 Philippines Interest Rate Decision
- 06:00 Fed Governor Cook Speaks
- 06:30 ECB President Lagarde Speaks
- 07:10 Fed Vice Chair for Supervision Barr Speaks
- 07:10 ECB’s Enria Speaks
- 09:25 FOMC Member Williams Speaks
- 10:00 Fed Governor Kroszner Speaks
- 10:30 Fed Waller Speaks
- 10:35 Fed Vice Chair for Supervision Barr Speaks
- 10:45 MPC Member Ramsden Speaks
- 12:00 FOMC Member Mester Speaks
- 15:30 Fed’s Balance Sheet
- 15:30 Reserve Balances with Federal Reserve Banks
Friday, November 17, 2023
- 03:30 President Lagarde Speaks
- 08:00 German Buba President Nagel Speaks
- 08:10 MPC Member Ramsden Speaks
- 09:45 Fed Goolsbee Speaks
- 10:00 FOMC Member Daly Speaks
Federal Reserve FOMC Schedule 2023
- January 31-February 1, 2023 (second day: statement released 1400 EST/1900 GMT; news conference expected 1430 EST/1930 GMT)
- March 21-22 (second day: statement released 1400 EDT/1800 GMT; news conference expected 1430 EDT/1830 GMT)
- May 2-3 (second day: statement released 1400 EDT/1800 GMT; news conference expected 1430 EDT/1830 GMT)
- June 13-14 (second day: statement released 1400 EDT/1800 GMT; news conference expected 1430 EDT/1830 GMT)
- July 25-26 (second day: statement released 1400 EDT/1800 GMT; news conference expected 1430 EDT/1830 GMT)
- September 19-20 (second day: statement released 1400 EDT/1800 GMT; news conference expected 1430 EDT/1830 GMT)
- October 31-November 1 (second day: statement released 1400 EDT/1800 GMT; news conference expected 1430 EDT/1830 GMT)
- December 12-13 (second day: statement released 1400 EST/1900 GMT; news conference expected 1430 EST/1930 GMT)
The Fed with a Strong US Dollar
The strong dollar is likely to negatively affect the US economic outlook and could alter the Federal Reserve terminal interest rate, economists surveyed by Bloomberg said. Just 28% saw the currency strength as unlikely to have any impact.
Latest Key Central Bank Decisions, Reports Archive
2023
Reserve Bank of Australia Raises Rates to Ten Year High 4.35%, Inflation Pressures Cited
Bank of England Maintains Interest Rates at 5.25%, Emphasis on Cuts a Long Way Off
Brazil Central Bank Deliver Third 50bps Rate Cut in a Row to 12.25%
Federal Reserve Kept Rates Unchanged; Eases Financial Conditions
Yen Falls After Bank of Japan Changes Language Around 1% 10yr JGB Cap BUT No 1.5% Extension
- ECB Breaks Hiking Cycle, Leaves Key Interest Rates Unchanged at 4.50% at October Meeting
- Norway’s Norges Bank Holds at 4.25%, Guides Another 25bps in December with a Caveat
- Bank of Canada Holds Rates at 5.00%, Cuts 2023 Growth Forecast To 1.2% from 1.8%
- Federal Reserve Beige Book Highlights Labor Market Tightness Continued to Ease
- Reserve Bank of India Kept its Key Rate at 6.50% Repeating a Hawkish Bias as Expected
- Reserve Bank of New Zealand Leaves Rates Unchanged, Extending its Hawkish Pause
- RBA Holds Rates at Ten Year High 4.10%, For Fourth Straight Meeting
- Yen Falls Further After Bank of Japan No Change to Monetary Policy or Forward Guidance
- Central Bank of Turkey Raises Rates By 500 bps to 30%, Lira Continues to Weaken
- Taiwan Left Interest Rate Unchanged at Highest Since 2015
- Sweden’s Riksbank Raise Rates by 25 bps, Selling Reserves, Signals Another Hike
- Bank of England Maintains Interest Rates at 5.25%, Higher for Longer, Increases QT Pace
- Swiss National Bank Surprises Leaving Rates Unchanged at 1.75% Sending Swiss Franc Lower
- Hong Kong’s Monetary Authority Keeps Rates in Lockstep with Fed at 16 Year High 5.75%
- Brazil Central Bank Cut Rates 50bps to 12.75%, Signals More Cuts
- Federal Reserve Kept Rates at 22-Year High 5.25-5.50% Range as Expected
- ECB Raises Rates Another 25bps, Seen as a Dovish Final Hike
- Federal Reserve Beige Book Highlights Consumers Exhausted Savings, Job Growth Subdued
- Bank of Canada Holds Rates at 5.00% as expected, Warns CPI Higher with Gasoline Prices
- RBA Holds Rates at Ten Year High 4.10%, For Third Straight Meeting
- Fed’s Powell at Jackson Hole; Inflation: Progress and the Path Ahead, the Market Response
- Norway’s Norges Bank Raised Rates 25bps to 4% and Guided Another Hike Likely in September
- Philippines Central Bank Held Rates at 6.25% with Stable Peso and Downward Inflation Trend
- Russia’s Currency Slide Accelerates, Is the Ruble the New Turkish Lira?
- Bank of England Raises Interest Rates to 15-year High 5.25%, Monetary Policy Restrictive
- RBA Holds Rates at Ten Year High 4.10%, For Second Straight Meeting
- Bank of Japan No Change to Monetary Policy, JGB Yield Band Hard Celling to 1.00%
- ECB Raises Rates Another 25bps, Hints May be End of Rate Hikes
- Hong Kong’s Monetary Authority Raises Interest Rates in Lockstep with Fed to 16 Year High
- Federal Reserve Raise Rates to 22-Year High 5.25-5.50% Range as Expected
- Bank of Korea Keeps Rates Unchanged at 3.50%, Too Early on Stable Won Level
- Bank of Canada Raises Rates by 25bps to 5.00%, Persistent Price Pressures Remain
- Reserve Bank of New Zealand Leaves Rates Unchanged 5.50%, Inflation Remains Too High
- RBA Holds Rates at Ten Year High 4.10%, Signals Hiking Cycle Near End
- Sweden’s Riksbank Raise Rates by 25 bps, Krona Falls to New Record Low Against Euro
- Banco de México Leaves Rates Unchanged at Record High 11.25%, Inflation Risks to Upside
- Central Bank of Turkey Raises Rates First Time in Two Years, By 650 bps to 15.0%, Lira Collapses
- Bank of England Raises Interest Rates to 15-year High 5.00%, Risk of British Recession Increases
- Norway’s Norges Bank Raised Rates by 50 bps to 3.75%, Supports Krone, Fights Inflation
- Philippines Central Bank Held Rates at 6.25%, Highest Since May 2007 as Inflation Moderates
- Bank Indonesia Keeps Rates Unchanged at Highest Level Since 2009 With Weaker Rupiah
- Swiss National Bank Raised Policy Rate by 25 bps to 1.75%, Will Remain Active in FX Market
- Brazil Central Bank Left Rates Steady at 13.75%, Delete Reference to Possibly Resuming Hiking
- Bank of Japan Keeps Monetary Policy Steady, No Change to JGB Yield Band as Expected
- ECB Tightens Screws, Raises Rates Another 25bps Despite Europe Being in a Recession
- Hong Kong’s Monetary Authority Kept Interest Rates in Lockstep With Fed, Hibor Continues to Rise
- Federal Reserve Leave Rates Unchanged as Expected. See 5.6% Fed Fund Rate at Year End
- Reserve Bank of India Kept its Key Repo Rate at 6.50% as Expected
- Bank of Canada Raises Rates After Five Month Pause by 25bps to 4.75%
- RBA Suprises Again Raising Rates to Ten Year High 4.10%, Australian Dollar Higher
- South Africa Raises Interest Rates 50bps, Rand Falls to All Time Low
- Ahead of Election Runoff Turkey Central Bank Leaves Rates at 8.5% as Lira Hits New Lows
- Reserve Bank of New Zealand Raise Rates by 25bp to 5.50%, Kiwi Sells Off on Peak Rate
- Bank of England Raises Interest Rates 25bps to 4.50%, Inflation Remains Too High
- Federal Reserve Financial Stability Report, Follows Three of the Four Largest Failures in U.S. History
- ECB Raises Rates Another 25bps, Highest Level Since July 2008
- Norway Hikes Interest Rate to 3.25 percent, Concerns About Weak Krone
- Hong Kong’s Monetary Authority Raised Interest Rates 25bps Despite Banking Liquidity at 2008 Lows
- Brazil Central Bank Left Rates Steady for Sixth Month at 13.75%, Less Likely to Resume Hikes
- Federal Reserve Raises Rates 25bps as Expected, Removes Additional Firming May be Appropriate
- Bank Negara Malaysia Surprises by Raising Interest Rates 25 bps to 3%
- Deja Vu as Dollar Yen Soars After Bank of Japan Keeps Monetary Policy Steady, No Change to JGB Yield Band
- Sweden’s Riksbank Raise Rates by 50 bps, However Dovish Tilt Weakens Krona
- An RBA Fit for The Future, 51 Revolutionary Recommendations for Australia’s Central Bank
- Bank Indonesia Keeps Rates Unchanged at Highest Level Since 2009 With Rupiah Stable
- Bank of Canada Holds Rates at 4.50% as Expected, Sees Inflation at 2% End of 2024
- Bank of Korea Keeps Rates Unchanged at 3.50%, Higher Rate Remains Possible
- Reserve Bank of India Surprised Keeping its Key Repo Rate at 6.50%
- Reserve Bank of New Zealand Unexpectantly Raise Rates by 50bp to 5.25% to Highest Since December 2008
- RBA Keeps Rates Steady at Ten Year High 3.6%, Monetary Policy Operates with a Lag
- ECB Raises Rates Another 50bps, Banking Sector Resilient
- Federal Reserve Beige Book Highlights Supply Chain Disruptions Continued to Ease
- Bank of Canada Holds Rates at 4.50% as Expected, USDCAD at Four Month High
- RBA Raises Rates to Ten Year High 3.6%, Less Hawkish Statement
- Reserve Bank of New Zealand Raise Rates by 50bp to 4.75% to Highest Since January 2009
- Banco de México Raises Rates by 50 bps to Record High 11.00%, Reacts to Higher Inflation
- Federal Reserve Hypotheticals For 2023 Bank Stress Tests have Unemployment at 10%
- Sweden’s Riksbank Raise Rates by 50 bps, Moves to Strengthen Krona
- Reserve Bank of India Hike Rates Sixth Time in a Row to 6.50%
- RBA Raises Rates to Ten Year High 3.35%, says Further Hikes Ahead
- ECB Raises Rates Another 50bps, Lagarde Says Another 50bps in March
- Bank of England Raises Interest Rates 50bps to 4.0%, Projects Inflation Likely Peaked
- Hong Kong’s Monetary Authority Raised Interest Rates 25bps Lockstep with US Federal Reserve
- Brazil Central Bank Left Rates Steady for Fourth Month at 13.75%, Cautious Due to Fiscal Risk
- Federal Reserve Raises Rates 25bps as Expected, Disinflationary Process has Started
- Bank of Canada Hikes Rates 25 bps to Highest Level Since 2008, Signals Holding Pattern
- 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
- 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
- Federal Reserve Beige Book Highlights Housing Markets Continued to Weaken
- Dollar Yen Soars After Bank of Japan Keeps Monetary Policy Steady, No Change to JGB Yield Band
- Bank of Korea Raises Rates To 3.50%, Highest level Since August 2008
2022
- Turkey Central Bank Cuts Left Interest Rates Unchanged at 9%, Bond Yield Hits Six Year Low
- Bank Indonesia Raised Rates by 25 basis points to Highest Level Since 2009
- Yen Soars After Bank of Japan Mini Pivot Widens Yield Curve Control Band
- Banco de México Raises Rates by 50 bps to Record High 10.50%, Hints at More Hikes
- ECB Raises Rates Another 50 bps as Expected, Forecasts Higher Inflation
- Bank of England Raises Interest Rates 50bps to 3.5%, Projects Inflation Likely Peaked
- Taiwan Raised Interest Rate by 1.75 percent, Highest Since 2015
- Norway Raised Interest Rate by 25 bps to 2.75 percent, Highest Since 2009
- Swiss National Bank Raises Policy Rate by 50 bps to 1.00%, as expected
- Philippines Central Bank Raised Rates by 50 basis points to 5.50% with Inflation at 14 Year Highs
- Hong Kong’s Monetary Authority Raised Interest Rates in Lockstep with US Federal Reserve
- Federal Reserve Raises Rates 50bps as Expected, Hawkish Revisions to Unemployment and Inflation
- Bank of Canada Hikes Rates 50 bps to Highest Level Since 2008
- Reserve Bank of India Hike Rates Fifth Time in a Row to 6.25%
- RBA Raises Rates to Ten Year High 3.10%, says Inflation in Australia Too High
- Federal Reserve Beige Book Highlights Higher Interest Rates Further Dented Home Sales
- NY Fed Williams Expects US Jobless Rate to Rise from 3.7% to 4.5-5.0%
- Turkey Central Bank Cuts Interest Rates Another 150bp Ending Easing Cycle
- Sweden’s Riksbank Raise Rates by 75 bps to the Highest Level Since December 2008
- South Africa Raises Interest Rates 75bps to Tame Inflation
- Bank of Korea Raises Rates To 3.25%, Highest level Since June 2012
- Reserve Bank of New Zealand Raise Rates by 75bp to 4.25% to Highest Since January 2009
- Appreciation of Swiss Franc Guards Against Inflation says SNBs Jordan
- Fed Vice Chair Brainard says Slower Pace of Rate Increases Probably Soon
- Bank of England Raises Interest Rates 75bps to 3% in Biggest Rise in 30 Years
- Norway Raised Interest Rate by 25bps, Norwegian Crown Fell Against Euro
- Markets Reverse Sharply on Feds Powell Statements, What Does it all Mean?
- Federal Reserve Again Raises Rates 75bps as Expected, Hints at Possibly Smaller Hikes
- Japan Spent ¥6.35 trillion in October on Intervention to Support the Yen
- ECB Raises Rates Another 75 bps as Expected TLTRO Terms and Conditions Recalibrated
- Bank Indonesia Raised Rates by Another 50 basis points to 4.75% to Tame Inflation
- Federal Reserve Beige Book Highlights Employment Strength as Price Increases Generally Moderate
- RBA says Financial Stability Risks Have Increased Globally
- Banco de México Raised Rates for 11th Straight Time to Record 9.25%
- Cable Pounded Again After Indecisive Bank of England Statement
- Japan Intervened to Support Yen for First Time Since 1998 After BOJ Decision
- Swiss National Bank Raises Policy Rate by 75 bps to 0.50%, Swiss Franc Falls sharply
- Philippines Central Bank Raised Rates by 50 basis points to 4.25%, Moves to Support Peso
- Bank of Japan Monetary Policy Unchanged Sending Yen to a Fresh 24-Year Low
- Brazil Central Bank Pauses Rates at 13.75%, after Inflation Eased Below 10%
- Federal Reserve Gives All Banks a Pass in Annual Bank Stress Test
For a Complete Macro and Micro Market Overview Visit Our Traders Market Weekly
Sources: TC WSJ Bloomberg Scotia Bank
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