Tuesday's market low-down
Global stocks advanced on Tuesday as markets prepare for the Fed’s interest rate decision on Wednesday.
The US Dollar edged higher as it trades above 102.00, following US housing market data showing signs that inflation is moderating. Tuesday’s labour market data also contributed to evidence that wage growth is slowing, however this may not be enough to sway a hawkish Fed. The Fed is widely expected to slow its pace of rate hikes this Wednesday, with markets pricing in a 25bps hike, taking interest rates to 4.75%. Despite this the Fed has maintained its hawkish narrative, and Powell has continuously pushed back on the idea of rate cuts this year. 10 year US treasury yields pared earlier gains, as they hovered around 3.53%.
Thursday will see a rate decision from both the BoE and ECB, where both central banks are widely expected to raise interest rates by 50bps. The BoE however, are expected to deliver a hawkish hike, as it continues to battle inflation. Cable continues its gradual decline ahead of Thursday’s meeting, as the GBP/USD rally seems to have run out of steam.
Markets will be keeping a keen eye on comments made by Bailey regarding the path for rate hikes going forward.
