ECB monetary policy meeting on Thursday 27 October 2022, +75bp the (unanimous) expectation

European Central Bank 27 October 2022

BoA preview, not seeing much support for euro:

  • We expect the ECB to hike 75 bps with a clear signal of more to come, in line with recent communication and market pricing. We argue it is too early for QT (quantitative tightening), but the language around APP (Asset Purchase Programmes) reinvestments is likely to change, preparing the ground for discussions. An announcement on punitive tiering or changing TLTRO (Targeted Long Term Refi Operations) terms seems likely to us, even if the details follow later.
  • In FX, we do not believe the hawkish ECB steps and tone will be enough to support the EUR, given market expectations and remaining challenge

Brazil’s central bank leaves its benchmark rate unchanged for the second month in a row

  • Will remain vigilant
  • Will assess if the strategy of maintaining the Selic rate for a sufficiently long period will be enough to ensure the convergence of inflation
  • Will persist in its strategy until consolidating disinflation and the anchoring of expectations around its targets
  • Will not hesitate to resume the tightening cycle if the disinflationary process does not proceed as expected
  • Relevant horizon for monetary policy includes 2023 and 2024
  • External economic outlook remains adverse and volatile
  • Markets seem more sensitive to fiscal fundamentals, including in developed countries
  • Brazilian economic indicators suggest a more moderate growth rate

Nasdaq and S&P lower. Dow holds on to a small gain. 3 day win streak snapped in the NASDAQ and S&P

The major US stock indices are closing near there lows. The S&P and the NASDAQ index both closed lower on the day and snap their 3 day win streak. The Dow industrial average eked out a small gain extending its win streak to 4 trading days (but just barely).

A look at the final numbers shows:

  • Dow industrial average is closing up 2.35 points or 0.01% at 31839.12
  • S&P index is down -28.51 points or -0.74% at 3830.59
  • NASDAQ index is down -228.11 points or -2.04% at 10971.00
  • Russell 2000 is up 8.17 points or 0.46% at 1804.33

The lower yields in the US tried to help the price rebounded intraday. In addition Bank of Canada’s rate hike of 50 basis points which was less than the 75 expected helped. However the headwinds from major big caps including Microsoft (-7.72%), Google (-9.65%), and Boeing (-8.70%) was just too hard to overcome. Apple fell -1.92% and Amazon fell by -4.10%. Both will announce their earnings after the close tomorrow.

Go to top