Morning Brew March 23 2023

Good Morning,

The FOMC hiked by 25 BPS and Powell’s message was not fully clear on the path going forward but more rate hikes were possible if  required.  He also stated  banking industry stress could trigger a credit crunch with significant implications for the  economy and that tight credit conditions had the same effect as higher rates. At the same time,  Janet Yellen spoke and said there would be no blanket insurance for depositors. Equities closed lower with the all big three losing 1.6%. Banks were the weakest sector.

Powell did not see ratee cuts this year but rates and FX traders clearly disagree. At the May meeting there is still an weighted hike of 10 bps expected but by December the rate is seen down 0.7%.

Two year yields fall to 3.9% again and the USD Index to 102, EURUSD broke the 1.09 handle, GBPUSD rose to 1.2330 and USDJPY fell to 130.70.

Gold and Silver rose and are now trading at 1980 and 23.00. Bitcoin came under pressure on news of the SEC is considering legal action against Coinbase. Coinbase stock fell 13% and Bitcoin fell from 28.750 to 26.750 to recover half way to 27750. With that is closed the gap it created Monday.

Today, traders will digest the Fed from yesterday and focus on the Swiss National Bank, The Central Bank of Turkey and the Bank of England at 9:30, 12:00 and 13:00 CET.

Central Bank Expectations:

The Norwegian Central Bank is expected to hike by 25 BPS at 8 this morning.

SNB: A hike by 50 BPS with a probability of 70% and 25 BPS with 30%

BoE: A hike by 25 BPS with a probability of 90% and no change with 5%

Central Bank of Turkey: No Change with a probability of 95% a cut by 25  with 5%

At 13:30 the usual US employment data and New Home sales will be released followed by EU sentiment at 16:00.

The EU Summit in Brussels could cause some volatility as one of the agenda points is the ban of combustion engine from 2035.

Trade safely.

Thursday 23 March

• US                   New home sales (Feb)
• Eurozone         Consumer confidence (Mar)
• Switzerland     Swiss National Bank policy rate decisions  
• UK                        Bank of England policy rate decisions
• Norway           Norges Bank policy rate decisions
• Japan              Reuters Tankan manufacturing (Mar)
• Singapore        CPI (Feb)
• Hong Kong      CPI (Feb)

Friday 24 March

• US                        Durable goods orders (Feb)
• US                   S&P manufacturing PMI (Mar. preliminary)
• Eurozone         PMI composite (Mar)
• Germany         PMI composite (Mar)
• France             PMI composite (Mar)
• UK                   GfK consumer confidence (Mar)