Wyllian Capucci
06/17/2021
Dot Plot
The Federal Reserve is signaling a faster pace of policy tightening thanexpected. Yesterday’s dot chart suggested two rate hikes until the endof 2023 and President Jerome Powell said it was the “meeting to talk about it”in reference to the discussion of tapering. There also seemed to be someuncertainty about how temporary the rise in inflation will be, with Powell admittingthat there is a risk that it will prove to be greater than policymakers think.The action the bank took yesterday was to increase its rate by 5 basis points.overnight reverse repurchase agreement and interest paid on excess reserves,amid the growing excess of dollars in short-term finance marketsdeadline
Moving down
The Fed’s slightly more aggressive decision than expected pushed the marketsglobal equities further down, with the European Stoxx 600 index fallingthis morning for the first time in 10 days. S&P 500 futures also pointfor further losses at the opening, with Asia posting its biggest drop in a monthduring the night. The big story is the strength of the dollar, which led to another fall in thegold after its fall yesterday, while the Bloomberg Commodity Index tumbledmore than 2% of your pre-Fed level. The 10-year Treasury yield was 1.565%
It’s not the only game in town
While the Fed dominates the headlines today, there’s a lot more to digest from the bankscenters around the world. The Chief Economist of the European Central Bank, Philip Lane,speaking to Bloomberg television, signaled that the bank may maintain stimulus for longertime than many expect. Norway’s monetary authority is preparinga series of quarterly interest rate increases starting in September, while theSwiss National Bank maintained its ultra-flexible policy stance. There is notexpectation of movement in interest rates based on central bank decisionTurkish at 8:00 am, Brasília time. Brazil saw the expected increase of 75 pointsrates on yesterday’s rate and lawmakers have opened the door for further increaseshigher as inflation forecasts increase.
Claims
Back in the US, it is expected that the weekly number of unemployment insurance claimstoday show continuous improvement, with the number of new hires toreceive benefits predicted to drop to 360,000. Powell reiterated yesterday that theFederal Reserve Stays Some Of Its Policy Goal of “Progressadditional substantial”, while expressing confidence that the US economy ison the way to “a job market that shows low unemployment, highparticipation and increase in people’s wages across the spectrum.”continuing claims drop to 3.425 million with the data released at 9:30 am.
Coming
In addition to the claims data, we also get the latest Business Outlookfrom the Philadelphia Fed at 9:30 am. The US Leaders Index for May is at 11:00 am. THESecretary of the Treasury, Janet Yellen, appears on the Ways and Means Committee of theHouse on President Joe Biden’s Budget. SEC can issue its decisionabout a Bitcoin ETF. Adobe Inc. is among the companies reporting results.65
Source:https://wintrademarkets.com/
