Today's news headlines:
‘Jay Powell refuses to rule out US recession after third 0.75% rate rise’. After the Federal Reserve implemented its third consecutive 75 basis point rate increase last night, Chairman Jay Powell has refused to rule out a US recession as the Federal Open Market Committee hinted at intentions to keep monetary policy tighter to combat soaring inflation. The FOMC published a gloomy outlook for the world’s largest economy in the subsequent press conference and Powell remarked that ‘the chances of a soft landing are likely to diminish’ because monetary policy needs to be ‘more restrictive or restrictive for longer’. (Financial Times)
‘Vladimir Putin mobilises army reserves to support Ukraine invasion’. In his address to the nation on Wednesday morning, Russian President Vladimir Putin announced that Russia is defending itself against a west that wants to ‘weaken, divide and destroy Russia’ as well as a ‘partial mobilisation’ of 300,000 reservists to bolster Russian forces fighting in Ukraine. Konstantin Malofeyev, a nationalist Russian tycoon has said in an interview ‘the whole world should be praying for Russia’s victory because there are only two ways this can end: either Russia wins, or a nuclear apocalypse’. (Financial Times)
The S&P 500 closed 1.7% lower yesterday afternoon after its second day of consecutive losses, while the tech-heavy Nasdaq dropped 1.8%. The two-year US Treasury yield, which follows interest rate expectations, rose to 4.1% in the aftermath of the Fed interest rate decision, a 15-year high. Sterling’s troubles could be exacerbated as all ears tune in to the Bank of England’s Official Bank Rate decision at midday.
BoJ Policy Rate: -0.1% (unchanged).
BoJ Core CPI y/y: 1.9% vs 1.8% previously.
SNB Policy Rate: 0.5% vs -0.25% previously.
BoE Official Bank Rate: 12:00PM
US Unemployment Claims: 1:30PM
EU Consumer Confidence: 3:00PM
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.