From the FXWW Chatroom: Kaplan (NV; Neutral) – speaking at 3pm NY, Kaplan sees US growth of 2.50-2.75% in 2018 a bit slower than last year. He sees cyclical rise in inflation offset by some factors like technology. He also noted that the Neutral rate has come down meaningfully. He supported further removal of accommodation this year especially with more tax cuts noting that he’s worried about the US economy overheating. That said, he did point to low 10yr yields as a reflection of expectations that growth will slowdown
o Evans (NV; Dove) – speaking at 3pm NY, Evans noted that tax cuts should add to business investment, boosting growth sustainably over the next couple of years. He reiterated that inflation needs to get up to 2% but hiking too much won’t get us there. He said he’s favors less than Fed median of 3 hikes in 2018. On the topic of bitcoin, Evans said bitcoin holders are “swimming with all the sharks”
o Mester (V; Hawk) – speaking at 4:30pm NY, Mester said the Fed could improve the effectiveness of monetary policy through three shifts in the way it communicates its decisions and intentions. She proposed less focus on recent economic data and more on accumulated changes in economic and financial conditions. She also favors linking economic projections with each Fed official in their quarterly forecasts without revealing the officials identity. Lastly, she said Fed should use multiple monetary policy rules as reference points while “discussing why our policy may differ from them,”
· The trade weighted USD (BBDXY) rose +0.16% managing a late day rally. Six of the 10 major currencies outperformed the US led by GBP (+0.37%) and MXN (+0.30%) while JPY (-0.75%) and KRW (-0.60%) were the two worst performing currencies. This was the JPY first decline after running off six straight day of gains. Bitcoin gained +5.33% to $11,291 but at one point traded as low as $9,185. Bitcoin has lost nearly 50% over the past month largely on the back of increased scrutiny from regulators
· WTI oil gained +0.56% to $64.09/bbl the sixth time in the last seven days that black gold has rallied. Markets will await the weekly EIA inventory reports which will get released Thursday at 10am NY pushed back a day due to the US holiday on Monday. Expectations are that oil inventories likely fell by -3.15mm bbl last week which would mark ninth straight week inventories have declined
· All four major US equity indices registered gains on Wednesday with thr of the four recording more than a +1% gain: DJIA (+1.25%) NASDAQ (+1.03%) S&P 500 (+0.94%) Russell 2000 (+0.87%). The DJIA registered its biggest one day gain since Nov 30 (+1.39%) on the back of surge in Boeing stock (+4.7%). All 11 S&P 500 sectors registered gains led by Technology (+1.58%) and Consumer Staples (+1.17%)
· US 10yr yields rose +4.6bp to 2.58% and marks the first day in the last seven sessions were 10yr UST yield didn’t closed between 2.54-2.55%. The bear flattening of the UST curve was the primary move driven by a combination of better risk appetite and technical breaks. Total US Treasury volumes relative to 20-day moving avg: Tokyo (241%) London (257%) NY (125%)
View the latest market information in the FXWW Chatroom with a free trial.