It hasn’t been the most thrilling start to the week but that is highly unlikely to continue, with debt ceiling talks, inflation releases, PMIs and Fed minutes all to come.
Today we’ll have to settle for comments from some Fed policymakers and while James Bullard’s claim that we should see two more hikes this year may have done more than the morning coffee to wake some people up this Monday morning in the US, the reality is we can take those comments with a relative pinch of salt at this point.
We’re going to learn a lot about how the US is coping with its extremely aggressive tightening cycle over the next few months which when combined with the effects of the mini-banking crisis in March may force a rethink on interest rates going into the end of the year.
While investors can freely take that position now, it’s not so easy for Fed officials to do the same in the absence of hard evidence. And it makes no sense to change their tune without it even if they suspect they may eventually as they’ll simply undermine their efforts to this point.
Still, the Fed minutes on Wednesday will be of interest in order to gauge where different officials stand on this subject and whether there’s already a consensus forming for pausing at the next meeting in June. That said, the inflation data on Friday is what counts most, even coming a couple of weeks after the CPI. Only when the core is falling can the Fed pivot; until then a meeting-by-meeting pause is all we’ll get.
Lira nears 20 to the dollar as Ogan endorses Erdogan
The lira is getting crushed once more and has come within a whisker of 20 to the dollar for the first time. This comes ahead of the run-off contest this weekend between the incumbent Tayyip Erdogan and challenger Kemal Kilicdaroglu. While it may not ultimately impact the outcome after a strong first showing, third-place candidate Ogan officially endorsed Erdogan today, potentially ending any hope Kilicdaroglu had of emerging victorious. More years of very unconventional monetary policy likely lie ahead.
Bitcoin choppy but the correction may not be over
Bitcoin remains in consolidation and choppy day-to-day since breaking below $27,000. The break itself was quite a bearish signal but once more we’ve seen some resilience from cryptos. The recent trend very much remains against it though, with a deeper correction looking possible after such an unbelievable run this year. The next big test below could be $25,000.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
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- Source: https://www.marketpulse.com/news-events/central-banks/a-big-week-to-come-despite-a-sluggish-start-to-the-week/cerlam
