Risk-On Equities Defy a Hawkish Backdrop as Market Signals Diverge
Fundamental Overview Markets are presenting an unusually mixed picture following this week’s central bank decisions. The Federal Reserve’s rate increase and the prospect of a broader rate-hiking cycle support a more restrictive monetary backdrop, while the Bank of Japan’s policy communication has been interpreted as less hawkish than expected. US bond yields have pulled back…
FOMC Takes Centre Stage as Markets Remain in a Holding Pattern
Fundamental Overview Markets remain in a waiting phase ahead of tonight’s FOMC decision, with a 25-basis-point rate increase from 3.75% to 4.00% expected. Attention will extend beyond the rate decision itself to the message on the US economy and the path for monetary policy. UK inflation rose to 3.1% year-on-year from 2.9%, in line with…
Hawkish Fed Reinforces Risk-Off Bias, but Markets Remain Resilient
Fundamental Overview The Federal Reserve delivered a 25-basis-point rate hike, beginning what could develop into a broader rate-hiking cycle. Market pricing now points towards the possibility of further increases, potentially taking the federal funds rate towards 4.75% over the coming months. The key message is that financial conditions are not considered restrictive enough. Combined with…
Markets Consolidate Ahead of the FOMC as Risk-Off Bias Remains
Fundamental Overview Markets are entering a wait-and-see phase ahead of Wednesday’s FOMC decision, with an 88–90% probability of a Federal Reserve rate hike to 3.75–4.00% currently priced in. UK labour data showed a considerable increase in claimants, although the unemployment rate performed slightly better than expected. Attention now turns to UK inflation on Wednesday, with…
Bond Yields Push Higher as Markets Turn Mildly Risk-Off
Fundamental Overview Markets enter a significant week with elevated bond yields, ongoing conflict in the Middle East and important central-bank decisions ahead. US inflation remains above target, while consumer sentiment weakened to 47.8 and 12-month inflation expectations stand at 4.6%. Attention now turns to central banks. The Federal Funds Rate forecast has moved to 4%,…
