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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MARKET INSIGHT
Yesterday's Fed decision and press conference continues to be digested by markets. As we noted yesterday, Powell did not explicitly talk up the prospects of a 50bp March hike or hikes in every meeting this year, but nor did he downplay these possibilities either. This led to continued downside moves for the Eurodollar strip through the Asian session, before hitting a low around 6:00GMT and moving a tiny bit off its lows since European traders have started to get to their desks.
- At the time of writing a 25bp hike was around 120% priced into March (i.e. 25bp fully priced with a 20% probability of a 50bp hike). This is up from around 100% pricing prior to yesterday's Fed decision. There are now around 4.75 hikes priced in through 2022, up from around 4.00 prior to the decision. The dollar has continued to strengthen through the session, while other STIR futures are being pulled a bit lower by the Fed moves. As the chart below shows, EURUSD's divergence from STIR spreads has largely disappeared now.
- Looking ahead to today's events, we had some better German consumer confidence data this morning while we have CBI retail sales coming up (neither particularly market moving). More important will be preliminary US durable goods data for December which is release alongside the first print of US G4 GDP at 13:30GMT.
- There is not much on the speaker schedule today, but we will look out for any FOMC members making media appearances today.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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