Federal Reserve Raises Rates 25bps as Expected, Disinflationary Process has Started

The Federal Reserve raised rates by 25 bp to a target range of 4.50-4.75% in unanimous vote at their February meeting as expected. Market Fed futures pricing suggested a 96% chance of a 25 bps hike. The markets focused on “ongoing increases in the target range will be appropriate.” Fed says “Inflation has eased somewhat but remains elevated.” in a change from “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price … Continue reading “Federal Reserve Raises Rates 25bps as Expected, Disinflationary Process has Started”

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”

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”

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”

US Producer Price Inflation Fell More Than Expected in December

US Producer price inflation for December fell -0.5% vs. -0.1% consensus and +0.2% in November (revised from +0.3%). On a year-over-year basis, the index for final demand was +6.2% Y/Y vs. +6.8% expected and +7.3% prior (revised from +7.4%). The release was in line with a softer Consumer Price Index we saw last week. Core PPI rose +0.1% vs. +0.1% expected and +0.2% prior (revised from +0.4%). Core PPI was +5.5% Y/Y vs. +5.7% expected and +6.2% prior (unchanged). In … Continue reading “US Producer Price Inflation Fell More Than Expected in December”

Central Bank Watch – Korea Raises, BOJ Sequel to JGB, Dollar Yen Massacre Ahead

This week’s main event was Chair Powell’s speech at the Riksbank International Symposium and the reaction to US CPI, the reaction was muted to a soft report, outside of rising Services inflation. The Bank of Korea raised the Base Rate to 3.50%, the highest level since late 2008 as expected. Bank of England policymaker Mann said more needs to be done on rates and there is no risk of overtightening yet. We had a slew of Fed speakers but nothing … Continue reading “Central Bank Watch – Korea Raises, BOJ Sequel to JGB, Dollar Yen Massacre Ahead”

US Consumer Services Inflation Still Rising, 7.5% in December from 7.2% in November

The December CPI report had been overblown, like everything it seems these days. The headline numbers were as expected. The Consumer Price Index declined 0.1% m/m (consensus 0.0%), with a 9.4% m/m decline in the gasoline index, while core CPI, increased 0.3% m/m as expected. On a year-over-year basis, CPI was 6.5% from 7.1% in November. Core CPI was up 5.7% versus 6.0% in November. CPI was lower for a sixth straight month to the lowest since October 2021. However, services … Continue reading “US Consumer Services Inflation Still Rising, 7.5% in December from 7.2% in November”

Central Bank Watch – Powell, ECB and BoE Speakers at Riksbank

We kicked off 2023 with no surprises from the FOMC December meeting minutes which were followed up a barrage of Fed Speakers later in the week. They continued the party line but did caution on too fast, too high. This week’s main event will be Chair Powell’s speech at the Riksbank International Symposium and the reaction to US CPI, particularly given U.S. Treasuries closed out the first week of 2023 in beastly form Friday following the December jobs report average hourly earnings … Continue reading “Central Bank Watch – Powell, ECB and BoE Speakers at Riksbank”

Central Bank Watch – Fed Minutes and Speakers Kick off 2023

The highlight this week will be the FOMC Minutes on Wednesday from the December meeting. The equivalent meeting last year was when it became clear the Fed was pivoting to an aggressive agenda and the S&P had topped just two days before. From then we got the beginnings of the end for the stock market, crypto, bonds and a slew of other assets. We also get a barrage of Fed Speakers on Thursday and Friday, no doubt aware of marker … Continue reading “Central Bank Watch – Fed Minutes and Speakers Kick off 2023”