March 13, 2023
United States:
Fed Flies Blind on Monetary Policy With Rising Risk of a 6% Rate
The Federal Reserve is flying blind as it tries to bring down inflation without breaking the financial system or crashing the US into a recession.
Ahead of a crucial meeting later this month, policymakers are wrestling with an economy that’s proven surprisingly resilient to their rapid-fire interest-rate increases and an investor class that’s grown jittery about the health of the financial system after the collapse of Silicon Valley Bank.
Europe:
Traders See Under 50% Chance of Half-Point Hike by ECB This Week
Traders trimmed the odds of a half-point hike by the European Central Bank later this week to under 50%, with the prospect of further monetary tightening fading rapidly across the world after the collapse of Silicon Valley Bank.
Money markets priced in 34 basis points in hikes for Thursday, which implies a less than 50% chance of a 50-basis-point increase. Traders now see the ECB deposit rate peaking at 3.30%, some 90 basis points lower than just a week ago.
Asia:
China Bulls See Xi-Putin Ties as Top Wildcard Risk
China’s relationship with Russia and the potential role it might play in the war in Ukraine are the biggest wild-card risks to markets that investors are missing, according to the latest MLIV Pulse survey.
Geopolitical concerns and President Xi Jinping’s increasing power are casting a shadow over the optimism among professional investors, a third of whom still plan to add to their China exposure in the next 12 months.
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