- Prior -0.75%
- Sight deposits interest rate raised by 50 bps to -0.25%
- The rate hike is to counter increased inflationary pressure
- Tighter monetary policy aimed at preventing inflation from spreading more broadly
- SNB still willing to be active in foreign exchange market as necessary
- Cannot rule out further rate hikes to stabilise inflation
- Full statement
Well, it looks like I’ll have to eat my words. The SNB does have the propensity to pull off a surprise and almost no one saw this coming, at least not a 50 bps move. It is their first rate hike since 2007 as they try to get ahead of the curve on inflation . USD/CHF has dropped from 0.9975 to 0.9830 and this could just be the start if markets pile on the pressure. It’s not a good look as for risk as well when even the most dovish of central banks are starting to move.
As the market is caught up with the post-Fed musings, we’ll be getting more major central bank action on the week later today.
The SNB and BOE are on the agenda and while things are likely to be more straightforward, the probability for surprises makes it that we could see some wild swings if we do see any that is.
For now, risk tones are keeping calmer as US futures are little changed and Treasury yields mildly higher on the day. S&P 500 futures are flat at the moment while 10-year yields are up 3 bps to 3.32%. The market is still settling in and trying to figure out what comes next after the Fed decision yesterday.
In FX, the dollar is trading more mixed and in the event of any further retracement, the technicals will be key. But in the bigger picture, I’d expect the greenback to hold its ground for the most part. The euro has the whole fragmentation headache to deal with while the pound is weighed down by the fact that the UK is leading the recession race. Meanwhile, the BOJ continues to throw the kitchen sink to maintain yield curve control and that isn’t too comforting for the yen.
I’ll put up some previews to the SNB and BOE later as the central bank decisions are all there is to focus on in the session ahead.
0730 GMT – SNB announces its June monetary policy decision
1100 GMT – BOE announces its June monetary policy decision
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
We will see a tremendous amount of wealth destruction ahead. Capital preservation should be the one and only priority now. It’s going to get very ugly, very fast.
The heads up for the huge options expirations day on Friday has been the subject of much chatter all week. Now that the FOMC is out of the way I thought I’d join in!
Coming up on 17 June 2022, Friday is options expiration. Its a monster one.