Daily summary: The Fed has no competition

5:59 PM September 22, 2022
  • Today was full of central bank interest rate decisions (BoJ, SARB, Norges Bank, BoE, SNB, CBRT).

  • The Bank of Japan decided not to change its policy, indicating that it will remain accommodative for a very long time. The yen weakened after the decision, but it was later reported that currency intervention was undertaken.

  • The SNB decided on a 75 bps hike, in line with analysts' expectations, but the market was pointing to 100 bps. The franc weakened after the decision, but inflation forecasts suggest further hikes.

  • BoE raised 50 bps, in line with consensus, though market saw chances of 75 bps. BoE members were divergent in their decisions. The BoE predicts a technical recession as early as Q3. The pound weakened quite a bit today.

  • CBRT surprisingly cut interest rates by 100 bps to 12% weakening the lira.

  • The U.S. dollar continued its domination of the market, with EURUSD holding below parity.

  • Wall Street indices tried to make up for yesterday's strong losses, but we are seeing a further strong rise in yields, which pushes Wall Street to multi-month lows.

  • Gas lost heavily today due to a triple-digit gain in US gas inventories.

  • The dollar and Wall Street declines are supported by further excellent data from the US labor market. Benefit claims rose slightly, but the overall trend remains downward

  • As reported by Reuters, one of the largest investment banks, Credit Suisse (CSGN.CH) is considering various options to downsize its Investment Banking unit. One option is to sharply reduce its U.S. operations. Credit Suisse however denies reports it is planning to leave the US market.

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