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IPFS News Link • Economy - International

Watch Live: Powell Speaks At The ECB Sintra Forum

•, by Tyler Durden

Courtesy of Newsquawk, here is context ahead of today's panel.

Fed: Given Fed Chair Powell spoke at the Humphrey Hawkins testimonies last week, and the FOMC the week before that, it is unlikely Fed Chair Powell will have anything fresh to say. However, data since has been strong (albeit not primary data like inflation or employment), particularly housing data, consumer confidence and the durable goods reports on Tuesday, which could give the Fed Chair confidence in the current dot plots for two more 25bp hikes, despite the market only pricing in one more. Powell will likely tow the familiar line that future policy decisions depend on the data, and with NFP & CPI on July 7th and 12th, respectively, ahead of the July 26th meeting, it is unlikely Powell will make firm commitments ahead of July, but he did note the July meeting was a live one at the last FOMC and markets look for a 75% probability of a 25bp hike after the "skip" in June.

ECB: Lagarde has also spoken extensively in recent days and there have been several ECB source reports, and all imply a July rate hike from the ECB is a done deal, while the odds of another hike in September are also increasing. The latest source reporting this morning noted that some ECB officials are considering a faster reduction of its bond portfolio, noting active sales of securities from the APP could be the logical next step after TLTRO loans have been fully repaid at the end of 2024, however, some were more opposed to the idea amid concerns APP sales would lead to big losses at some Eurozone central banks. Therefore it will be interesting to see if Lagarde touches on this.

BoE: The BoE last week hiked by a surprising 50bps following a hot inflation report the day before with a hawkish split, where 7 of the MPC voted for 50bps. but the usual doves Dhingra and Tenreyro (departing) opted for an unchanged decision. Into the release, market pricing was a near coin flip between either a 25 or 50bps hike, but the consensus (taken pre-CPI) was for a 25bp hike. The decision saw analysts ramp up future rate hike expectations for the peak rate, and the latest Reuters poll is for the BoE to see a peak rate of 5.5% in September, with a 25bp hike in both August and September. However, markets are pricing a peak rate of 6.0% in December - commentary from Bailey on guidance will be key, but he will likely take a data-dependent approach, stressing the need to bring inflation down and repeat BoE guidance that they are prepared to do more if necessary.