Macroeconomic/ geopolitical developments
- The key focus last week was the Federal Reserve Open Market Committee (FOMC) decision, statement and press conference on Wednesday. This brought an anticipated 75bp rate hike, but also a more hawkish tone than markets had anticipated, with rates possibly now moving to a higher peak in 2023 up to 4.50% and staying elevated.
- In addition, downbeat comments from Fed Chair Powell assisted to the “risk off” move in global assets.
- Powell stated “no one knows whether this process (of raising rates) will lead to a recession or, if so, how significant that recession would be.”
- The Bank of Japan (BoJ) Japan intervened in the Forex market to support the Yen for the first time since 1998 after after USDJPY moved above 145.00.
- The UK mini-budget saw tax-cuts, the cancellation of national insurance and corporation tax increases, supply-side reforms, plus a GBP 60 billion energy support package.
Global financial market developments
- The major US stock averages suffered prominent losses last week for a second successive week.
- European and Asian equity indices were also appreciably lower.
- US 10yr yields moved up through the June and 2022 yield peak.
- US Dollar strength renewed and extended, DXY hit a new multi-decade peak.
- USDJPY was erratic with the BoJ intervention, but still aims higher.
- GBPUSD plunged post the UK mini-budget to another new multi-decade low, as the Pound slumped across the FX board.
- Gold hit further new multi-month low.
- Oil plunged Friday to another new multi-month low, with risks still lower.
- Copper sold off for a bear tone.
Key this week
- Central Bank Watch: A quiet week for Central Banks, but Federal Reserve Chair Powell speaking on Tuesday, and we also get the Bank of Japan (BoJ) Meeting Minutes earlier that day.
- Macroeconomic data: Also, a relatively quiet week for data with US Durable Goods Orders, GDP and PCE the standouts, with the UK GDP, plus German CPI, Retail Sales & Unemployment also released in Europe.
|Key Macroeconomic Events
|German IFO Survey
|US Durable Goods Orders
|Bank of Japan (BoJ) Meeting Minutes; Fed Chair Powell speaks
|German CPI; US GDP and PCE
|UK GDP; German Retail Sales & Unemployment; US PCE