Financial Markets Daily Report04 May 2023
Yesterday’s Federal Reserve meeting resulted as a nonevent for financial markets as the 25bp rate increase to the 5.00%-5.25% target range was 100% priced in. Also, the removal of an explicit reference in the press release of further interest rate increases in the coming meetings was consistent with the expectation of a pause in the hiking cycle.
- Yesterday’s Federal Reserve meeting resulted as a nonevent for financial markets as the 25bp rate increase to the 5.00%-5.25% target range was 100% priced in. Also, the removal of an explicit reference in the press release of further interest rate increases in the coming meetings was consistent with the expectation of a pause in the hiking cycle.
- On March’s turbulences in financial markets, the Fed signaled that credit conditions are tightening, specially so from small and medium sized banks, and that will have an uncertain impact on the economy, employment and inflation.
- In this context, yields on sovereign bonds declined in the euro area and, more markedly in the US, while equities were mixed. In FX markets, the US dollar weakened against most currencies and the euro fluctuated above $1.10.
- Today the focus will be on the ECB monetary policy meeting, where a 25bp rate hike that brings the deposit facility rate to 3.25% is expected.