Jerome Powell, Christine Lagarde and Andrew Bailey blamed pandemic and the war for sending inflation off the chart at a European Central Bank (ECB) event yesterday. We blame them for having called inflation transitory, and having been left behind the curve for too long.
The EURUSD slid to 1.0430, and the euro bulls are gently leaving the market, increasingly less convinced that Christine Lagarde doesn’t have a magic tool to address the fragmentation issue in Europe. The ECB is not expected to raise the rates by more than 25bp at its next meeting, even though inflation in Spain and Belgium advanced past the 10% level. So a 25bp hike may seem insignificant to you. To us, too. No wonder the euro-swissy is below the 1.00 mark. If the fall continues, the Swiss National Bank will likely intervene.
The US will release the latest PCE figure today, which will likely show no pleasant surprise in the US, either. Happily for the Federal Reserve, investors don’t care much about the PCE index, even though the latter is what the Fed is watching to determine whether inflation is in line with its policy.
But what’s worrying is the news that the banks have started cutting their earnings forecasts and price targets for US big tech stocks.
Elsewhere, tensions between Russia and the West continue rising as NATO decided to welcome Finland and Sweden in the alliance. Putin threatened that if NATO infrastructure is deployed in these countries, Russia will have to respond in kind. Oil prices remained fairly contained however, as the European Union agreed on a framework to eliminate carbon emissions for new cars and vans by 2035.
Watch the full episode to find out more!
0:25 Who do you blame for high inflation?
2:32 EUR under pressure
3:39 Why US PCE is not ‘that’ important?
5:35 JP Morgan cuts Big Tech price targets
7:38 Bitcoin remains under pressure
8:19 Oil consolidates before OPEC decision
Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
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