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Balance sheet tapering to commence

Today's news headlines:

‘Fed to begin “rapid” balance sheet reduction as soon as May, says top official’. Lael Brainard, the Federal Reserve’s next vice chair, has stated that tapering of the central bank's $9tn balance sheet will begin as soon as May. Support is now building among policymakers for more aggressive hawkish policy action to keep a lid on inflation. The latest Fed minutes from the March meeting will be released today, and Chairman Jerome Powell has hinted that details of balance sheet tapering will be included. The US Treasury sell-off continues with the ten-year trading 1.60% higher today. (Financial Times)

‘EU prepares ban on Russian coal imports after atrocities in Ukraine’. The EU Commission will meet today to debate whether more action should be taken regarding the conflict in Ukraine. President Ursula von der Leyen is expected to announce bans on the import of Russian coal, which accounts for 70% of all coal imports into the EU. The call for more sanctions comes against a backdrop of potential war crimes, with Ukrainian President Volodymyr Zelensky calling for Russia to be brought to justice. (Financial Times)


Asian markets traded broadly lower overnight following hawkish comments from Federal Reserve’s Brainard and rising Coronavirus infections in Shanghai. Oil prices are trading relatively flat to start the day, with WTI just shy of $102 per barrel. The US Dollar Index is up 20 basis points so far.


China Caixin Services Purchasing Managers’ Index: 42.0 (est. 49.6)
German Factory Orders m/m: 2.2% (est. -0.2%)
UK Construction PMI: 9:30AM
Canada Ivey PMI: 3:00PM
US Treasury Secretary Janet Yellen speaks: 3:00PM
Federal Open Market Committee Meeting Minutes: 7:00PM

Interbank rates:

GBP/USD – 1.3065
GBP/EUR – 1.2000
EUR/USD – 1.0886
USD/CAD – 1.2496

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.