Asia-Pacific markets digested the Federal Open Market Committee (FOMC) on Wednesday. Market moves in the session saw a weakening for the US dollar and some flows back into equities and their derivatives. The emphasis from Powell as the bank crisis as a tightener of financial conditions was amplified by the Wall Street Journal’s Nick Timaraos. If this is a correct interpretation (seems it is to me) it diminishes the need for Federal Open Market Committee (FOMC) tightening, at the margin, with a lower terminal rate the outcome. This is the bond market interpretation and its not a new idea, its been discussed ever since SVB collapsed. Indeed, analysts have been lowering their peak rate projections since the FOMC and Powell’s presser on Wednesday. BoA are in the bullets above and I’ve seen similar from others.

Fresh news was light only.

From the Reserve Bank of New Zealand we had a speech and Q&A from Reserve Bank of New Zealand Chief Economist Paul Conway. There are two bullet points above on his comments. In brief his message was that the RBNZ’s aggressive monetary policy tightening is having the desired effect of slowing demand in the economy. He added that if inflation expectations don't fall the Bank is prepared to tighten further.

The NZD rose against the USD on the session, as did AUD, CAD, GBP, EUR, JPY (USD/JPY hit a 6 week low) and even CHF (just a little for CHF ahead of the Swiss National Bank policy decision due later today).

On the crypto front the news was Coinbase has been served a ‘Wells notice’ by the US Securities and Exchange Commission (SEC). This is a heads up to the firm for enforcement action. A Wells notice has been compared to a ‘guilty until proven innocent’ assumption and does not auger well for the firm. It may result, for example, in Coinbase having to ‘delist’ some products it currently trades on its ‘exchange’. Bitcoin and crypto folks generally will need to be watching this.

In political news, a Canadian MP resigned from Justin Trudeau’s governing Liberal Party caucus after an allegation involving Chinese diplomats. As for the numbers in the House of Commons, Trudeau is unlikely to be too much bothered. While his is a minority government, he still has the support of his coalition partners to continue to govern.

Asian equity markets:

  • Japan’s Nikkei 225 -0.24%

  • China’s Shanghai Composite -0.05%

  • Hong Kong’s Hang Seng +0.64%

  • South Korea’s KOSPI +0.15%

  • Australia’s S&P/ASX 200 -0.54%

Still to come, Swiss National Bank and Bank of England policy decisions:

  • at 0430 US Eastern time and 0800 US Eastern time respectively
boe snb 23 March 2023