Powell : "it would be... very premature to declare victory" on inflation but "the disinflationary process has started" and "It’s very difficult to manage the risk of doing too little and finding out in six or 12 months that we actually were close but didn’t get the job done. If we feel like we’ve gone too far . . . inflation is coming down faster than we expect, then we have tools that would work on that" >> so he kind of claimed victory! mentioning disinflation a few times too, he aligned words and actions..pretty straight talking, market got caught with its universal hawkish expectations (and thus short rates and risk), all flipped during presser with Pow's constructive chatter
Powell put the breaks on, so the only question is whether Christine 'says' a similar message after the 50bps hike, same for BoE where most think 50bps, though a 25bps hike IMHO does not look too far fetched.. (probably too early for any shift there at mom from ECB, maybe within 2months though..)
The European Central Bank is all but certain to raise interest rates again and pencil in more hikes for the next few months, with the only open question being how big these will be
U.S. Jan. ADP Nonfarm Employment Change: 106K, [Est. 178K, Prev. 235K, weaker, came out ahead of FOMC yesterday and set the tone...
Germans Buy record amount of Gold! Central Bank buying 2nd highest level in history
Adani stock losses hit $100bn after company calls off share sale, this is going to cost a few banks holding collateral in the group...Citigroup’s wealth arm stops accepting Adani securities as collateral for margin loans, joining Credit Suisse in stepping up scrutiny of the group...
Mark Zuckerberg says Meta is making this the ‘year of efficiency’
Hong Kong will give away 50,0000 free airline tickets to tourists around the world, welcoming them to travel to Hong Kong, chief executive of the HKSAR John Lee announced on Thursday
Goldman Sachs reiterates its forecast for Brent to hit $105 per barrel by the fourth quarter, saying oil will benefit as colder weather spurs demand
BoJ Deputy Gov Wakatabe: need to be cautious about another YCC Band Widening
Markets :
Mr Market got caught short UST's and risk going into FOMC, Powell straight talking, not more hawkish than many were looking for, given positioning, and here we are - early days - META helped last night (up nearly 20%..), AMZN and APPL next amongst others >>> let' see now IF following days validate the market reaction from the event yesterday (and probably today too) from a macro point of view..broadly speaking nothing from Powell yesterday that changes the mood since #peakinflation #peakusd #peak worries of last Sep/Oct..and momentum from the start in Jan >>> softer USD, risk does ok, GOLD higher, duration joins in on lower yields
USD weaker, GOLD higher, Copper softer (weaker growth signals ahead)
Equity markets rallied, DOW flat, with 10's rally in 10y bonds, duration got a boost, QQQ shorts mainly squeezed, new longs established on break-up. QQQ off to the races/break up on techs, Mr Market was short as rates got smashed in Jan... no wonder reaction, irrelevant of anyone's view on the day.. #duration
Crude near lows - worth building a few friendly longs from here
GOLD could well be on its way to retest March 2022 highs
NatGas prices are all the way back down to where we were in early 2021, US NatGas down 40pct or so in Jan !
Powell didn't sound as preoccupied as some commentators have been about recent easing as measured by certain FCI "Financial conditions didn’t really change much from the December meeting to now. They mostly went sideways or up and down, but came out in roughly the same place." Nick Timiraos on Twitter: "Daleep Singh: “Markets rallied fiercely despite the hawkish message because investors know the Fed isn’t omniscient nor is it dogmatic. Economic conditions are in charge when the Fed is in data-dependent mode.” https://t.co/vfjPjO1Diu" / Twitter >>> Arguably, his big opportunity came early in the Q&A, when he was asked if he was worried that financial conditions had eased. This appeared to be a straightforward opportunity for him to say “yes” and browbeat the market, if he wanted to, he didn't
have a great end to the week
Steph & Team
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