Morning Minutes

Central Banks Continue To Tighten Monetary Policy




Yesterday’s late afternoon rebound in the US that propelled the NASDAQ and the S&P 500 to relief rally gains of 3.75% and 2.25% respectively continued overnight in Asia Pacific trading where the Hang Seng soared 7.4% and the Nikkei climbed 3.5%. This morning, however, enthusiasm has quickly cooled. US index futures are all down about 0.2%, while over in Europe, action is mixed with the Dax down 0.6% while the FTSE is up 0.5%. The US 10-year treasury note yield is holding steady near 2.15%, its highest level since 2018.

Although Nickel plunged on its return to trading from a multi-day halt over in London, commodity prices have otherwise been on the rebound this morning. With gains of 5.8% and 6.1% respectively, WTI and Brent Crude Oil are both trading back up above $100.00/bbl, while gasoline is up 4.8%. In metals action, copper is up 0.8%, platinum is up 1.3% and gold is up 1.6%.  

The impact of spiking commodity prices and rising inflation on central banks has become so powerful that the war in Ukraine, while being recognized as a potential risk factor, has done nothing to dissuade banks form tightening. This morning, the Bank of England raised its benchmark interest rate for the third meeting in a row, a 0.25% increase to 0.75%.

Yesterday’s US Fed decision and statement was even more hawkish than expected. The US central bank raised the Fed Funds benchmark rate by 0.25% and the published projections suggest that most members are now expecting hikes of at least 0.25% at every one of the six remaining meetings this year, with increases possible into 2023. The Fed also joined the Bank of Canada in starting to talk about shrinking its balance sheet sometime soon.

US housing starts (1.76M vs street 1.69M) and US jobless claims (214K vs street 220K) both beat expectations. US industrial production (street 0.5% vs previous 1.4%) is due at 9:15 am EDT. Tonight the Bank of Japan is meeting with no changes generally expected.

SIA Wealth Market Outlook Webinar TODAY at 2:00 pm EDT

Please join us on Thursday, March 17 @ 12pm MT / 2pm ET for our Market Outlook Webinar with Portfolio Managers Paul Vendrinsky and Kyle Wilson, plus Colin Cieszynski, Chief Market Strategist. We will be discussing risk management in uncertain markets, recent changes to cash allocations in SIA Wealth managed portfolios, and answering questions from advisors and media related to inflation, monetary policy, the Canadian Dollar, oil and more.

The link to register for the webinar:

After registering, you will receive a confirmation email containing information about joining the webinar.  A replay will be available and sent to all registrants after the webinar.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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