- Bank of Canada hikes rates by 50 basis points vs 75 expected
- Bank of Canada MPR highlights: Sees 2023 GDP at +0.9% vs +1.8% in July
- Full text of the Bank of Canada rate decision on October 26, 2022
- Macklem opening statement: We are getting close to the end of tightening but not there yet
- Macklem Q&A: Expects to see growth near-zero for the next few quarters
- US treasury auctions off $43 billion and 5 year notes at a high yield of 4.192%
- Atlanta Fed GDPNow rises to 3.1% from 2.9% on October 19
- US weekly EIA oil inventories +2588K vs +1029K expected
- US September wholesale inventories advanced 0.8% vs. 1.0% estimate
- US September advance goods trade balance -92.22B vs -87.28B prior
Markets:
- AUD leads, USD lags
- Gold up $12 to $1664
- US 10-year yields down 9 bps to 4.015%
- WTI crude oil up $2.81 to $88.13
- S&P 500 down 30 points, or 0.8%, to 3829
Those hoping for a coordinated pivot from global central banks over the next 8 days got the start they were hoping for. The Bank of Canada under-delivered on rate hikes and Macklem's comments highlighted the risks of over-tightening while noting signs of a slowdown in the economy.
The loonie initially fell a full cent but later completely recovered. I highlighted why here.
The move from the BOC helped fuel a broad USD decline along with a bid in bonds. The market is sensing that the chances for a big central bank mistake are falling, at least on the hiking side. At some point, the pendulum may swing back to worries about inflation but there's some room in the middle for dollar softness.
The Aussie and New Zealand dollars were outperformers in part as other central banks follow their less-hawkish path but also because of growing hopes for stimulus in China. Copper prices rose 4.5% today as that trade picks up.
The pound also continues to recover as more fiscal austerity measures are floated. At some point that could backfire but the calm in the gilt market is the trade for now and the timeline for a new mini-budget has been extended to Nov 17.
The euro cruised back above parity and finished at the highs of the day at 1.0080. That's the best since Sept 13 and the fourth day of solid gains. It looks like a squeeze but the close above the October highs is a nice technical sign.
