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What to watch

OUTLOOK
  • Core fixed income markets remain under pressure in early European trading after Powell's comments at the FOMC press conference last night as he stated that the Fed still had "a way to go" on rate hikes (despite a more dovish than expected initial statement). This has pushed up expectations for the Fed's terminal rate with markets pricing in around 126bp for May 2023, up from around 122bp ahead of the decision.
  • Focus will now turn to the Bank of England's policy decision and the release of the Monetary Policy Report. Markets are pricing in around 71bp for today's decision with MNI and 20/22 of the analyst previews that we have read also looking for a 75bp hike. We note that there are risks of a smaller 50bp hike but think that the MPC will not want to rock the boat too much in financial markets as UK assets continue to recover after the previous government temporarily lost its fiscal credibility. The policy decision, MPR and Minutes will all be released at 12:00GMT / 13:00CET with a press conference beginning 30 minutes later. For the full MNI BOE preview click here.
  • Elsewhere today we will hear from a number of ECB policymakers as well as receive US trade, weekly claims, factory orders and ISM services data.

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