060 – Market and central banks at odds
Fed raised by 50bps. Less aggressive, but higher TR upped to 5.1 (4.6). Fed chair was hawkish.
ECB even more hawkish than Fed. 50bps ongoing and QT announced. Hawkish ECB is a more convincing case — more ground to cover, but more difficult to deliver because of the fractious nature of the bank.
BoE delivered 50 bps and was the least hawkish of the three. There was a three-way split: 0, 50bps, 75bps.
There is a disconnect between the banks and the market. Market’s expect cuts in H2 2023. Fed dismisses this.
Data is confusing and ambiguous. Services PMI beat to the upside, but industrial production and retail sales were both down (weak). CPI also showed signs of moderating.
This week:
BoJ — some reports suggesting an announcement regarding the 2% inflation target. CPI out as well (Fri).
CPI Canada – Wed.
US PCE data on Friday. May take lead from CPI and moderate.
Final GDP on Thurs q/q 2.9% (US), -0.2% (UK).
