- ECB leaves key rates unchanged in February monetary policy meeting, as expected
- ECB's Lagarde opening statement: Inflation to remain elevated for longer than expected
- Lagarde Q&A: Inflation surprises causes unanimous concern on governing council
- ECB sources: Sizeable minority wanted to chance policy today
- ECB sources: Officials believe it's sensible not to exclude a 2022 rate hike
- BOE raises bank rate by 25 bps from 0.25% to 0.50%
- BOE's Bailey: There is a debate on whether to move gradually or do a larger move to send a message
- BOE's Bailey: It made sense for the BOE to move in 25 bps increments
- More from Bailey: We are not behind the curve
- Bank of Englad Governor Bailey says the quiet part out loud
- US January ISM non-manufacturing 59.9 vs 59.5 expected
- US Factory orders for December -0.4% versus -0.4% estimate
- Boris Johnson's chief of staff quits
- Fed's Barkin: It's a 'straight-forward call' to raise rates now
- US recirculates the false-flag Russian attack info, with new details
- US initial jobless claims 238K vs 245K estimate
- US fourth quarter non-farm productivity +6.6% vs +3.2% expected
Markets:
- EUR leads, JPY lags
- S&P 500 down 112 points, or 2.4% to 4477
- Nasdaq -3.7%
- WTI crude oil up $1.81 to $90.07
- US 10-year yields up 6.5 bps to 1.83%
- German 10-year yields up 14 bps to 0.155%
- Gold down $1 to $1805
It was all about the ECB today as Lagarde signaled a hawkish pivot. That was a bigger surprise than the BOE votes for 50 bps, or perhaps it was more confirmation about which way the wind is blowing in central-bank-land. In any case, Lagarde put rate hikes on the table for this year and as soon as July. That sent global bond yields surging, led by the eurozone. In turn, the euro jumped to 1.1400 initially, then consolidated for a period before a second push as high as 1.1451.
The hawkish mood hurt the broad risk trade badly but the old risk-on/risk-off dyamic has shifted as central bankers struggle to control inflation. The commodity currencies advanced as commodity prices continued to rise. The underperformance of tech is also chasing money out of the US and towards value.
WTI rose above $90 with the US talking about a false flag attack in Ukraine again in what was a remarkable turnaround from $86.75. The loonie made some small progress but was restrained by broader worries and apprehension ahead of tomorrow's non-farm payrolls report.
Sterling initially jumped as four of nine MPC members voted for a 50 basis point rate hike but was unable to add to momentum, perhaps restrained by EUR/GBP buying. It finishes the day near 1.3600, up 25 pips.
As bad as the Nasdaq drop was, there's certainly some better news in the pipeline tomorrow with Amazon shares up a whopping 16% after hours on earnings and a price hike to Amazon Prime.
