Foreign Exchange Insights and Next Week
Next Week’s Menu: March 20 – 26, 2021
March 19, 2021
Central Banks: Interest rate policy will be reviewed in Switzerland, Iceland, China, Thailand, South Africa, Mexico, Colombia and the Philippines. NY Federal Reserve District President Williams is one of the Fed officials speaking in public, and Bank of England Governor Bailey gives a speech, too. Minutes from a previous Bank of Japan Board meeting will […] More
Central Bank Watch
Bank of Japan Modifies Policy but Characterizes such as “Furthr Effective and Sustainable Monetary Easing”
March 19, 2021
Long before the pandemic, the Bank of Japan had significantly modified the framework of its highly accommodative monetary easing in September 2016 and renamed the program Quantitative and Qualitative Easing with Yield Curve Control. Policy focus was shifted away from money growth to a more targeted effort to ensure a positive output gap, flatten the […] More
Central Bank Watch
Bank of Russia Tightens Unexpectedly
March 19, 2021
The Central Bank of Russia became the third monetary authority this week to raise its key interest rate in response to accelerating and above-target inflation, but unlike the tighenings in Brazil and Turkey which were merely larger than anticipated, Russia’s hike to 4.5% from 4.25% had not been expected. A statement from the Board of […] More
New Overnight Developments Abroad - Daily Update
Tough Week for Central Bank Credibility
March 19, 2021
At Wednesday’s press conference, Fed Chairman Powell tried to assuage investor concerns about inflation and the possibility of an earlier Fed tightening than indicated in the central bank’s forward guidance. Markets didn’t quite believe the dovish tone and drove the 10-year Treasury yield from 1.63% then to a high yesterday of 1.76%. Tech stocks in […] More
Central Bank Watch
Brazilian Selic Rate Hiked to 2.75%
March 18, 2021
As in Turkey, monetary policymakers at the Central Bank of Brazil out-tightened market expectations. The Selic interest rate was raised by 75 basis points, not 50 bps as forecast, to 2.75% in the first hike of any sort since 2015. The rate had been cut five different times last year from February through August by […] More
Central Bank Watch
Two Percentage Point Central Bank Rate Hike in Turkey
March 18, 2021
One currency to buck the downward trend of most currencies versus the dollar has been the Turkish lira, which has rebounded about 2% in response to a greater-than-expected 200 basis point increase in the Central Bank of Turkey’s one-week repo rate. Turkish CPI inflation has climbed to 15.6%. At 19%, the central bank interest rate […] More
New Overnight Developments Abroad - Daily Update
U.S. Treasury Yield Climbs Sharply in Spite of Fed’s Message and Lifts Dollar
March 18, 2021
Markets aren’t buying yesterday’s dovish policy message from the Federal Reserve. The 10-year U.S. Treasury yield roared ten basis points higher overnight to 1.74%, just shy of doubling mid-December’s level. The 10-year British gilt yield rose 6 basis points even though the Bank of England maintained its policy settings, too, and called its current monetary […] More
Central Bank Watch
FOMC Statement, Projections, and Press Conference
March 17, 2021
The FOMC voted unanimously (11-0) to retain the 0 to 1/4 percent federal funds target and continuing quantitative stimulus (purchases of at least $80 billion per month of Treasury bonds and at least $40 billion of agency mortgage-backed securities. Forward guidance was not modified but the released statement did tweak its projections. Growth conditions were […] More
Central Bank Watch
FOMC Preview
March 17, 2021
Since the last FOMC meeting seven weeks ago, investors have embraced riskier assets. The 10-year Treasury yield is 67 basis points higher now than then, and the DJIA is up 7.7%. The price of West Texas Intermediate crude oil has soared 21%, while gold has weakened 6.5%. the dollar has risen 5.0% against the yen, […] More
New Overnight Developments Abroad - Daily Update
Awaiting Today’s Fed Forecasts and Powell’s Press Conference
March 17, 2021
Against the backdrop of a significantly improved U.S. economic growth outlook this year and rising U.S. and global inflation lately, the 10-year U.S. Treasury yield climbed from 0.89% in mid-December to 1.01% when the FOMC last met to a 13-month high of 1.67% today, the second scheduled FOMC meeting of 2021 figures to be the […] More
