Ashraf tells AlArabia's Lara Habib that the FOMC is expected to open the door for further quantitative easing at Wednesday's FOMC statement, but such program may not take effect until later in the summer. The reason the Fed will not start the new program right away is due to the recent rally in equities (decline in VIX), which reduced the need for any immediate measures.
Ashraf tells AlArabia's Lara Habib that the FOMC is expected to open the door for further quantitative easing at Wednesday's FOMC statement, but such program may not take effect until later in the summer. The reason the Fed will not start the new program right away is due to the recent rally in equities (decline in VIX), which reduced the need for any immediate measures.
Markets are likely to see a resumption of the risk-on trade, largely in equities as long as the Fed communicates a clear indication regarding further measures in the future.
It does not matter the Bank of Japan will raise rates to a 30-year high. It also unlikely to cause a violent unwiding of the carry trade as was the case in August 2024? Why? First of all, Friday's 25-bp hike in the overnight rate to 0.75% is widely anticipated and will not be a surprise as in August 2024. Also remember, we had a rate hike in January, which was harmless in scale and in anticipation. Secondly, stock markets are well below their highs, meaning they're not at their peaks as was the case in August 2024, when they were vulnerable to any pricking from the Japanese needle. BoJ Governor Ueda, shall temper market fears, by indicating that the new 0.75% rate is well below the neutral rate, which is around 1.0%. This means 0.75% is not at all hawkish. If anything, it remains too low. Once Ueda asserts this point, while assuring no rush in future rate hikes --markets are likely to take it in stride. TIMINGS: BoJ announcements are usually between 3-4 am GMT, followed by the important press conference around 4.5 hrs later.
EURGBP & Bank of England
Today's weaker than expected UK CPI sharply boosted EURGBP and dragged down GBPUSD on improved expectations the BoE will cut rates tomorrow (Thursday).
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Uncertain December
The oscillating changes in market expectations for the December FOMC meeting implies more volatility into the next 4 weeks.
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