The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Global stocks advanced, and longer-dated US yields slipped on Monday, kicking off a week filled with earnings reports and central bank meetings. Both the US and Britain may hint at potential interest rate cuts.
Key events this week include US jobs data for July, manufacturing surveys, and eurozone GDP and inflation data. Markets are on edge with Big Tech earnings and the Federal Reserve's next moves in focus. Big Tech stocks saw gains but pulled back from earlier highs.
Approximately 40% of S&P 500 companies, including Microsoft, Apple, Amazon, and Meta Platforms, will report earnings this week. "The market fears that if Big Tech disappoints, it could drag down the entire market," said Quincy Krosby, LPL Financial’s chief global strategist.
The US Treasury will outline its bond sale plans, while China's politburo meeting may introduce more stimulus following last week's surprise rate cuts.
Markets anticipate the Federal Reserve will hint at a September rate cut after its two-day policy meeting ends on Wednesday. Futures fully price in a quarter-point easing and imply a 12% chance of a 50 basis point cut, with 68 basis points of easing expected by December.
Goldman Sachs analysts expect the FOMC to hold steady but hint at a likely September rate cut. The Bank of Japan, meeting on Wednesday, is 70% likely to hike rates by 10 basis points. The Bank of England’s Thursday meeting shows a 51% probability of a rate cut.
Market Performance:
- MSCI's global stocks gauge rose 0.13% to 804.51.
- European shares eased, with the STOXX 600 index down 0.2%.
- Nasdaq and S&P 500 rose, while Dow Jones fell.
S&P 500 gained 0.08% to 5,463.54, Nasdaq Composite rose 0.07% to 17,370.20, and Dow Jones fell 0.12% to 40,539.93. High earnings expectations mean any disappointment could affect mega-cap valuations and sector volatility, noted Chris Weston of Pepperstone.
Currency and Commodities:
- Dollar index rose 0.18% to 104.56.
- Euro fell 0.33% to $1.0821.
- Japanese yen traded at 153.99.
US 10-year note yields fell 3 basis points to 4.171%. Gold prices slipped with spot prices down 0.08% to $2,383.64 an ounce, and US gold futures settled 0.1% lower at $2,377.80.
Oil prices fell amid volatility. Brent crude settled down 1.7% at $79.78 a barrel, and US crude ended 1.8% lower at $75.81 a barrel, following tensions in the Middle East.
Comments
Post a Comment