JEMTF - Week Ahead: Central Banks
2024-03-16 08:55:00 ET
Summary
- The week ahead is dominated by central bank meetings - most central banks are not expected to change policy.
- The market is also keen for some guidance on how the Fed is thinking about its balance sheet.
- We do not expect major changes from December, even though Powell has warned that these projections are a snapshot based on current data and views.
There has been a dramatic adjustment to US rates. The two-year yield was near 4.40% before the US employment report on March 8 and it reached near 4.73% before the weekend. The 25 bp surge is the largest weekly increase since last May. For the first time in four months, the Fed funds futures strip no longer has at least three rate cuts discounted.
The interest rate adjustment underpinned the dollar, which rose against all the G10 currencies last week. Like the US two-year yield ( US2Y ), the 10-year yield ( US10Y ) also rose every day last week, and its 23 bp increase was the most since last October. The Dollar Index's ( USDOLLAR , DXY ) 0.70% gain was the largest rise in eight weeks, and ended a three-week decline. Rising rates helped lift the greenback almost 1.4% against the Japanese yen, despite heightened speculation that the Bank of Japan (finally) will lift its policy rate out of negative territory (-0.10%)....
Week Ahead: Central Banks