No Pivot from the Fed, but markets bounce about
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Thursday 3rd November 2022
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Who\\u2019d have thought that a fourth 75 basis point hike by the Fed would see equity markets rally and bond yields down? As NAB\\u2019s Gavin Friend explains, the bounce didn\\u2019t last long, and it was driven by the term \\u2018cumulative tightening\\u2019, which markets took to mean the FOMC committee believed they could slow down while they assess the aggregate impact of the hikes so far. But in the press conference that followed Jerome Powell made it clear any slow down wouldn\\u2019t imply the terminal rate will be any lower, in fact it is likely to be higher than they\\u2019d been thinking in previous meetings. Where does the Bank of England go today? The expectation is a 75 basis point hike there too, but in very different economic circumstances. If they do go lighter touch they\\u2019ll be keen to emphasise this is not a dovish pivot, simply taking stock of where they are now.
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