The market mood is settling down after the Fed yesterday with major currencies not hinting at much, though it is not to say that the reaction post-FOMC was that impressive.
Meanwhile, US futures are hinting at a breather with S&P 500 futures down 0.1% so far. And Treasury yields are also sitting lower, retreating from the overnight highs. That said, 10-year yields are still seen close to 2.14% and that is rather elevated but we'll see how things settle in the next few sessions. 2s10s are narrowing further, dropping to 22 bps and that continues to stoke yield curve inversion fears.
To be honest, I don't think there's much change to the outlook after the Fed yesterday.
The market pretty much got a reassurance that the Fed will tighten to counteract inflation pressures and the Fed is signaling that they could go more aggressively if needed. Adding to that is QT of course.
That said, as mentioned here, the market is boxed into thinking that it is either we see 7 rate hikes or a recession. However, there is a distinct possibility we could be heading towards an aggressive tightening cycle and a recession.
That narrative will take time to sort out so we'll take it as it goes in the months ahead.
Looking ahead to today, the BOE is expected to hike rates by 25 bps to 0.75%. I would argue risks are skewed to the upside for the pound as the central bank could move to hike by 50 bps. But just like the Fed, such a policy move won't do much to stifle surging inflation across the globe.
0700 GMT - Switzerland February trade balance data
1000 GMT - Eurozone February final CPI figures
1200 GMT - BOE announces its March 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.