What’s in Today’s Report:
- What the Fed Decision Means for Markets: Not as Hawkish as Feared (But That’s Not as Positive as It Used to Be)
- FOMC Decision Takeaways
- Retail Sales and Empire State Manufacturing Index Takeaways – A Further Loss of Momentum
Stock futures are down more than 2% this morning, tracking global shares lower as investors digest the latest central bank decisions, a rebound in rates and recession fears.
The Swiss National Bank surprised markets with a 50 bp hike overnight which is compounding fears about aggressive central bank policy in the face of slowing growth ahead of this morning’s BOE announcement.
Today, focus will be on the Bank of England announcement early and if we see another hawkish decision, stocks could extend this morning’s decline on a combination of rising rate fears and growing concerns about future economic growth.
From there, focus will turn to economic data in the U.S. with Jobless Claims (E: 220K), Housing Starts and Permits (E: 1.695M), and the Philadelphia Fed Manufacturing Index (E: 5.5) all due to be released this morning. With the Fed set on tackling inflation in the months ahead, the market will want to see strong data to show the economy can weather sharply tightening financial conditions.
Then in the late morning, the Treasury will hold an auction for 4-Week and 8-Week Bills at 11:30 a.m. ET. Bottom line, if we see rates rise materially today, especially on the shorter end of the yield curve, then stocks are likely to extend this morning’s declines on aggressive policy concerns.