ECB Raises Rates Another 50bps, Lagarde Says Another 50bps in March

ECB raised key rates by 50 bps in its February monetary policy decision following a 50-bps rate hike in December, and matching expectations from most analysts.  EU borrowing costs are at the highest level since late 2008 and ECB President pledged to deliver another 50bps rate hike at its next monetary policy meeting in March. The deposit facility rate is now 2%, the refinancing rate 2.5% and the marginal lending to 2.75%, a level not seen in fourteen years. The central bank … Continue reading “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

The Bank of England MPC at its December meeting Thursday raised the key bank rate by 50 bps from 3.50% to 4.00% as expected. It was the 10th consecutive rate hike and BoE’s benchmark rate puts the cost of borrowing at the highest level since late-2008. The vote was 7-2 (Tenreyro and Dhingra voted to keep rates unchanged, similar to the December meeting). The BoE’s projections again suggested CPI inflation has reached its peak, with the central bank dropping its pledge … Continue reading “Bank of England Raises Interest Rates 50bps to 4.0%, Projects Inflation Likely Peaked”

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”

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”

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”

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”

Bond Traders Weekly Outlook: US Completes Three Strong Auctions with Spectacular International Demand

U.S. Treasuries closed out the week on a lower note, after two days of strong gains around the December CPI report. Fed Chair Powell’s speech at the Riksbank International Symposium offered no anguish and a strong University of Michigan’s consumer sentiment report finished the week. The four-week bill yield jumped nearly 25 bps to 4.45% amid growing focus on the upcoming debt ceiling debate. The week saw three extremely strong auctions. $18 bln 30-yr bond reopening, $32 bln 10-yr note reopening, … Continue reading “Bond Traders Weekly Outlook: US Completes Three Strong Auctions with Spectacular International Demand”

Bank of Korea Raises Rates To 3.50%, Highest level Since August 2008

South Korea’s Monetary Policy Board decided today to raise the Base Rate to 3.50%, the highest level since late 2008 as expected. The move means the BOK has risen rates by 300 cumulative basis points since the BOK started the tightening cycle. This was the BOK’s seventh straight interest hike and the tenth increase since August 2021. Consumer price inflation has been falling since hitting a 24-year high of 6.3% in July, but the current rate of around 5% is … Continue reading “Bank of Korea Raises Rates To 3.50%, Highest level Since August 2008”