The BOE raised rates by 50 basis points as expected with 2 voting for no policy change. The expectations for inflation at the end of the year fell to 3.92% by Q4 2023 (previous forecast 5.2%). They raised their expectations for 2023 growth but it is still negative at -0.5% vs -1.5% last.
The inflation decline is a pretty good decline. After some up and down price action, the GBPUSD is trading lower (to new lows) and the GBP is the weakest of the major currencies in the morning snapshot. The JPY is the strongest of the majors. The USD on the day after the Fed hiked by 25 basis points and where Chair Powell said a "disinflationary trend" was underway (he did balance it out by saying it was still "premature" to claim victory and the tightening was to continue. The market hears what it wants to hear and stocks rose sharply yesterday, led by the Nasdaq which rose 2%. The S&P rose by 1% and the Dow was unchanged (there was a pattern in the changes). Today, the Dow is lower but the S&P and the Nasdaq are higher with the Nasdaq leading the way
The ECB is next with a hike of 50 basis points scheduled to be announced at 8:15 AM ET to 3%. ECBs Lagarde will start her press conference at 8:45 AM ET.
Before that:
- Initial jobless claims are expected to remain below 200K at 196K versus 186K last week
- US Preliminary nonfarm productivity and unit labor costs for the fourth quarter will be released. Productivity is expected to rise by 2.5% versus 0.8%. That's good news unit labor costs are expected to ease to 1.6% from 2.4% last quarter
- Canada building permits are expected to climb by -2.1% versus 14.1% last month
- factory orders will be released later this morning at 10 AM with expectations of 2.3% versus -1.8%.
Will be on the lookout for any ECB sources comments which traditionally leak out sometime this morning.
A snapshot of the markets are showing:
- Spot gold is up $4.33 or 0.22% at $1954.50
- Spot silver is up $0.49 or 2.05% at $24.45
- WTI crude oil is down $0.48 at $75.89
- Bitcoin is trading at $23,801. The high price extended to $24,258 for rotating back to the downside. That was the highest level going back to August 17
in the premarket video stocks, the features are implying a mixed opening:
- Dow Industrial Average is down 148 points after rising a small 6.92 points yesterday
- S&P index is up 19.25 points after rising 42.61 points yesterday. Staying above 4100 is a key support level now. The S&P index closeout 4119.20 yesterday
- NASDAQ is up 163 points after surging 231.77 point yesterday
in the European equity markets, the major indices are trading higher
- German DAX, +1.15%
- France's CAC, +0.10%
- UK's FTSE 100, +0.47%
- Spain's Ibex, +1.36%
In the US debt market:
- two year yield 4.085%, -2.4 basis points
- five year yield 3.472% -2.4 basis points
- 10 year yield 3.387% -1.1 basis points
- 30 year yield 3.554% unchanged
in the European debt market, yields are sharply lower with the UK tenure down -17.9 basis points to 3.13%. That's the lowest level since early December 2022
