FTSE 100 jumps 1.5% as markets rally ahead of Federal Reserve meeting – business live | Business

Hello and welcome to our ongoing coverage of the global economy, financial markets, eurozone and business.

Central bankers are in the spotlight today, putting investors on edge as they prepare for higher interest rates and the withdrawal of monetary stimulus.

Concern over the prospect of higher interest rates in the US has hurt markets in recent weeks. The US Federal Reserve sets policy today and is expected to signal that its hike cycle will begin in March.

With US inflation climbing to 7% and unemployment falling to 3.9%, the Fed may argue for tightening. But he faces a communications challenge to scare off markets that have grown accustomed to loose monetary policy, with four rate hikes this year whose price is now priced in.

Jim Reid, strategist at German Bank said Fed Chairman Jerome Powell, facing “an interesting day of communications”, particularly when he describes how he will approach quantitative tightening (QT).

It’s the Fed’s balance sheet reduction process that has ballooned thanks to its bond-buying stimulus program, which is set to end in March.


The year-to-date selloff in real rates and equity markets began when the Fed surprised markets with how much they were already considering early and aggressive use of the QT to increase their policy tightening, so any additional information will be devoured.

While it’s likely too early for the Fed to provide specific QT details today, our economists think it’s possible that Chairman Powell will begin to socialize a range of potential QT outcomes to begin concessions. involved in shaping market expectations.

The Bank of Canada also meets today, and he could possibly raise interest rates – as he tries to bring inflation down from a 30-year high of 4.8%

Trading in overnight swap markets suggests there is about a 70% chance the BoC will raise the benchmark interest rate to 0.5% from its emergency low of 0.25 %, reports Bloomberg.

Adam Cole of Royal Bank of Canada thinks the Bank of Canada will refrain from hiking today, but says it’s very close.


Inflation trends have moved largely in line with the Bank of Canada’s latest forecast, but this still represents price growth well above the 2% target rate. The Bank’s Quarterly Business Outlook Survey showed that pressures on business capacity and labor shortages were intensifying significantly, along with expected inflation and wage growth.

It’s already been a volatile week, especially on Wall Street, where the Dow Jones Industrial Average rebounded after falling 1,000 points twice in a row.

Tom Hearden
(@followtheh)

We are 65 straight points away from 1,000 day Dow point rally.
Must be a first, right? pic.twitter.com/sPModWY4Hg


January 25, 2022

European markets are poised for a higher open, after plunging on Monday and then recovering a bit yesterday.

IGSquawk
(@IGSquawk)

European opening calls:#FTSE 7445 +0.99%#DAX 15243 +0.78%#CAC 6902 +0.94%#AEX 746 +0.89%#MIB 26231 +0.78%#IBEX 8543 +0.75%#OMX 2261 +0.95%#SMI 12003 +0.48%#STOXX 4115 +0.90%#IGOpeningCall


January 26, 2022

Tom Hearden
(@followtheh)

What is this strange hue? pic.twitter.com/FPR5wxGblu


January 26, 2022

But with tensions over Ukraine still high, it could be another volatile day.

Agenda

  • 07:00 GMT: GfK Consumer Confidence Index in Germany
  • 7:45 a.m. GMT: Report on French consumer confidence
  • Noon: Weekly US Mortgage Applications
  • 13:30 GMT: US Goods Balance for Trade
  • 15:00 GMT: Bank of Canada decision on interest rates
  • 7pm GMT: US Federal Reserve interest rate decision
  • 7:30 p.m. GMT: Press conference by Fed Chairman Jerome Powell

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