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

  
  Analysis

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

  
  Analysis
  • 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

  
Analysis, US Market

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.

Major US stock indices close higher for the 3rd consecutive day

  
Analysis, US Market

After the close Microsoft and Alphabet will both report. Later in the week Meta, Apple, Amazon, and Intel will report.

The final numbers are showing:

  • Dow industrial average rose 337.10 points or 1.07% at 31836.75. The Dow industrial average is up 11.00% from its 2022 lows
  • S&P index rose 61.75 points or 1.63% at 3859.10. The S&P index is up around 10.4% from its 2022 lows
  • NASDAQ index rose 246.51 points or 2.25% at 11199.13. The NASDAQ index is up around 11.12% from the 2022 lows
  • Russell 2000 index rose 47.75 points or 2.73% at 1796.15. The Russell 2000 is up 9.34% from its 2022 lows

International Energy Agency head says in the middle of first global energy crisis

  
  Analysis

International Energy Agency (IEA) head ( Executive Director) Dr Fatih Birol.

  • Says the world is in the middle of the first truly global energy crisis.
  • the decision from OPEC+ to cut output by 2mn bbl/day is a risky one, especially as several economies are on the brink of recession
  • global LNG markets will tighten further in the next year as Europe’s imports will increase and demand from China may rebound

Birol is gonna get an ‘attaboy’ from someone who has railed against the OPEC+ cut …

biden smiling
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