Tom Westbrook’s outlook on the future of European and global markets
London markets were closed on Monday for Queen Elizabeth II’s funeral. With no less than 13 central bank meetings looming this week, the tone elsewhere was gloomy and tense.
Wednesday’s Fed decision – and committee members’ rate forecasts – was at the center, but decisions in the UK, China and Japan were also in focus.
Stocks tumbled last week as traders reprice Fed outlook, markets are now in 75 Wednesday rate hike, U.S. rates on track to soar to 4 by March % above.
Japan’s holiday capped moves in Asia, but pressure is adding to the yen and yuan as Beijing and Tokyo buck the policy tide by keeping interest rates low.
China cut the reverse repo rate on Monday, and the yuan fell to a weak 7 against the dollar. The benchmark lending rate will be determined on Tuesday, and there is a possibility of further cuts.
The Bank of Japan is facing mounting pressure from speculators in foreign exchange and bond markets to abandon its policy of pegging yields near zero – a change unlikely on Thursday , but not impossible.
The Bank of England also announced a policy decision on Thursday, but it was delayed by the death of the Queen and markets expected to raise interest rates, albeit divided on the magnitude.
Meanwhile, London bids Elizabeth farewell. An official in-state lying period ended shortly before sunrise, and in mid-morning, some 142 sailors pulled a gun cart containing her coffin to Westminster Abbey for the funeral .
Terminal speed https://inew.news/wp-content/uploads/2022/09/localimages/chart.png63280d7b0cebf.png
key developments likely to affect markets on Monday:
UK markets closed for Queen’s funeral
ECB speech by De Guindos
US September NAHB Real Estate Market Index
US Treasury Auctions