Archives of “April 2021” month

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Federal Reserve FOMC meeting today, Wednesday 28 April 2021 – Goldman Sachs say no hint of tapering

  
  Analysis

This preview in brief ahead on the Federal Open Market Committee meeting today, main points from Goldman Sachs:

 

  • We expect the taper timeline to keep rate hikes off the table until roughly mid-2023
  • Labour market slack remains too high for the Federal Open Market Committee to begin hinting at tapering
  • Economic recovery has accelerated sharply since the FOMC last met in March

 

We expect the FOMC to start hinting at tapering in the second half of this year and to begin tapering in early 2022. Our working assumption is that the pace of tapering will be $15bn per meeting, in which case it would take eight meetings or one year to complete.”

GS pic on the tapering time line ahead:

This preview in brief ahead on the Federal Open Market Committee meeting today, main points from Goldman Sachs:

At the close: Tech lags as earnings roll in

  
Analysis, US Market

Closing changes for the main North American markets:

Closing changes for the main North American markets:
  • S&P 500 -1 to 4186
  • Nasdaq -0.3%
  • DJIA – flat
  • TSX +0.15%
Earnings are rolling out with Google blowing away estimates and climbing while MSFT sinks on results. During the trading session it was Google struggling and Microsoft finishing at the highs, which goes to show that not everything leaks.
Visa also beat and I’ll be looking for commentary on consumers.
Expect much more volatility in the main index for the remainder of the week as the Fed sets the tone. The mode lately has been to sell stocks after the Fed. Of course, every dip in the past year has been a buying opportunity.

It’s too soon for the Fed to taper – TD

  
  Analysis

The FOMC decision is Wednesday at 2 pm ET

The FOMC decision is Wednesday at 2 pm ET

TD Research discusses its expectations for tomorrow’s FOMC policy meeting.

“We don’t expect any substantive new signal yet on tapering-or tightening-even as the tone on the economy is more positive than in March. We expect the signaling to evolve over time as the recovery proceeds, and we just changed our forecast for the start of tapering to March 2022 from September 2022,” TD notes.

“In the absence of a major catalyst-fixed income or otherwise-technicals, positioning and 10yr TIPS has us biased to USDJPY downside ahead of the meeting,” TD adds.

CDC updates recommendations for people who are vaccinated

  
  Analysis

CDC relaxes guidance for fully vaccinated people

The CDC is out with new guidance for fully vaccinated people. They say that those vaccinated can unmask when
  • Walking, running, hiking or biking e outdoors alone or with members of household
  • With small outdoor gatherings with a mix of vaccinated and unvaccinated people
  • Dining at outdoor restaurants with multiple households
The news represents good news on the Covid front but falls short of fully recommending unmasking in public places.
The White House Covid advisor Slavitt is without saying that
  • nearly 30 million Covid vaccine doses will be released this week
  • AstraZeneca vaccine is very safe and effective
  • The rate of new code cases in the US showing hopeful decline

USD/JPY ticks to a one-week high as Treasury yields edge up

  
Analysis, Forex

USD/JPY hits a session high

USD/JPY hits a session high
It’s tough to find big movers in the FX market but yen crosses are making headway. USD/JPY edged above the earlier session high to a one-week high. It’s is up 37 pips to 108.44.
The latest data slate had little impact with the focus narrowing on the Fed. Some support is coming from the bond market, where US 10-year yields are up 2 bps to 1.588%. I could see a further climb in the day ahead on Fed jitters and that would keep USD/JPY bid.
Technically, there’s an ongoing turn in USD/JPY but it’s running into the early March lows, which should offer some modest resistance.

OPEC+ ministers won’t meet with JMMC set to recommend no production changes

  
Analysis, Crude

OPEC+ won’t bother with formality

There was some speculation that OPEC could slow its return to production but even with demand slowing in India and Japan, it’s holding up better than anticipated and accelerating in the US.
The next meeting will be in early June.
WTI touched a session high at $62.84 a short time ago in a spike but it’s back to $62.49, up about 1% on the day.
Update: Reuters reports, citing a source, that the preference is to keep output plans along existing lines.

BOE announces sterling liquidity facility with BIS

  
  Analysis

BOE enters into a facility with BIS to ensure the provision of sterling liquidity during any future periods of market stress

Just one to take note of but I don’t think we’re seeing any funding issues with regards to the pound at the moment and I certainly don’t anticipate to see such drastic shortages in the future as well. But it is what it is. From the BOE:

Under the terms of the facility, the BoE will provide collateralised short-term Sterling liquidity to the BIS. The BIS may use the facility to provide Sterling liquidity to their eligible existing central bank customers.

Together with the swap lines the BoE has with a number of central banks, this new facility will provide a further liquidity backstop in Sterling to help ease any potential future strains in funding markets.

The full release can be found here.

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