There’s an expectation the Fed will ‘keep at it’ for a while yet. But not just the Fed. JBWere’s Sally Auld says markets have priced in more than a 75bp hike by the Bank of England as well this week.
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Prepare for a week or uncertainty. NAB’s Ray Attrill says, after the carnage last week the mix of central bank decisions and thinner liquidity with so many public holidays, means we could be in for a wild ride against this week.
NAB’s Rodrigo Catril says it makes no sense for shares to be rising last week when we can expect more bad economic news to come, so expect more volatility.
Bond yields rising even though ECB’s 75bp hike was fully anticipated and Jerome Powell said nothing new ahead of the Fed’s expected next big rise. NAB’s David de Garis said markets are hoping central banks will pull back at some point and they are looking for that inflection point, which isn’t happening yet.
Markets were surprised by a strong services ISM overnight. NAB’s Rodrigo Catril says forward indicators were also strong. This suggests the Fed has more work to do. Meanwhile Britain’s new PM has markets worried about large spending plans that won’t do much to calm inflation.
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