A hawkish month for central bankers has wrapped up this morning with the Bank of England announcing a larger than expected interest rate increase of 0.50% to 5.00%, and the Swiss National Bank raising its benchmark rate by 0.25% to 1.75% as had been widely anticipated, continuing on from yesterday’s comments from Fed Chair Powell that the fight against inflation is not over. These comments and moves add to the general monetary tightening trend, which has been running for over a year now, continuing higher and for longer than had been previously expected by investors.
Thursday morning finds the FTSE getting knocked down 1.0% while the Dax is down 0.50%. The three main US index futures contracts are all down about 0.3%, adding to yesterday’s US index losses of 0.3% to 1.2%. Commodity action is mixed again today with WTI Crude Oil down 1.9% and Copper up 0.8%.
After the close today, the Fed is releasing results from the latest round of bank stress tests. Positive results may continue to help rebuilding confidence in the health of the US banking system in the wake of the March problems at regional banks. There is a risk, however, that negative flareups could set confidence and the recovery back.
Overnight and into tomorrow, Flash Manufacturing and Flash Service PMI reports are on the way from several countries around the world. These numbers may provide some early insight into global economic conditions heading into the summer months.
US weekly initial jobless claims came in pretty much as expected (264K vs street 260K). US existing home sales are due at 10:00 am EDT. Powell’s testimony to Congress continues today as well.