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  • richard evans

Fed officials still pushing back on rate cuts for a couple of months at least

Good morning


Back at the desk after a couple of says visiting clients, potential clients and old friends, one of my favourite parts of this job.  What did I miss?  Well US dollar weakness is an ongoing theme, as are higher equities, with the US S&P back above 5,000 and the Dow Jones above 39,000, driven by higher tech stocks after the release of Nvidia’s earnings.  Asian equities are also up, Japan’s Nikkei 225 was up over 2% overnight, just a few points short of 39,100, breaking the all-time high that has held since 1989, the year I started working in the City. 


We had some decent moves yesterday, GBPUSD traded up to 1.2710 before dropping back to 1.2610, EURUSD saw similar moves trading up to 1.0890 before slipping to 1.0800.  For the record GBPUSD is now 1.2670, EURUSD 1.0825 which leaves GBPEUR at 1.1700.  USDJPY is brushing off the weaker USD, now up at 150.65. 


Several Fed officials were speaking yesterday, Cook, Harker and Waller.  They all followed a similar theme, that is there is no rush to cut rates. Preferring to wait for a couple more months of data to be sure inflation is on track to reach its 2% target.  Harker said May was possible for a rate cut but they are making it clear this is highly data-dependent.   

We do hear from a couple of ECB officials today, it will be interesting to get their take on rates.  I would not be surprised if they were more dovish than the Fed, and pointed to earlier rate cuts, particularly given the poor performance of the German economy recently.   


Elsewhere, I see an American firm has become the first commercial entity to land a spacecraft on the moon.  After a few nervy minutes of lost signal, contact was finally made with the craft.   I still find it amazing that we seem to be making trips to the moon far more difficult than they used to be. 


I mentioned British Gas offering lower fixed contracts earlier in the week.  This morning I read that the new price cap will see bills fall in April, although I do note that the standing charge, a real bug-bear of mine, may actually increase.  Why?  British Gas made £750mn last year.  We do not need higher standing charges and with LNG at low levels these energy prices are still too high in my humble opinion. 


Looking ahead to the weekend, we have a load of sport to enjoy.  Well, I say ‘enjoy’, England are currently 198-5 in the fourth test against India, better than the 112-5 they were at one stage but still struggling.  England rugby team will take on Scotland tomorrow in the Six Nations, neither team are a patch on what they have been so this will be a tough contest.  Scotland are favourites to win at the bookies. 


In football, the premier league has several fixtures although Spurs aren’t playing, while on Sunday we will have the EFL cup final between Chelsea and Liverpool. 


That’s about all from me.  Enjoy the day and have a terrific weekend as and when it arrives.  The sun is currently shining in through the window, a vast improvement on yesterday that’s for sure, although I’m not sure how long it will last.  Fingers crossed……


-  09.00 German IFO

-  10.00 ECBs Nagel speaks

-  13.00 ECBs Schnabel speaks


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