Morning Bid: History and the fifty club attract the BOE

A pigeon stands outside the Bank of England in London, Britain April 9, 2018. Picture taken April 9, 2018. REUTERS/Hannah McKay

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A preview of the day ahead in Alun John’s markets

Will the Bank of England make history today by raising rates by 50 basis points? Most likely.

Will the markets react much to this? Probably not. More than 70% of 65 respondents to a Reuters poll expect a half-point hike, which is virtually priced in by the markets. 0#BOEWATCH find out more

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Still, a half-percentage-point increase would seem like a big moment. It would be the biggest hike since Gordon Brown made the Bank of England independent in 1997, and would take the benchmark rate to 1.75%, its highest level since the start of the global financial crisis.

It could also be a way for the BOE to show its commitment to tackling inflation at its highest level in four decades and to curry favor with Liz Truss, one of the main candidates for the post of Prime Minister who wants the BOE’s policy mandate to ensure it is tough on inflation. Read more

The BOE isn’t alone in trying to catch up with searing inflation by raising rates, of course, and the Reserve Bank of Australia raised rates on Tuesday, marking a mouth-watering 175 basis point increase since May.

Overnight, another group of Fed policymakers almost told the markets they were wrong to read the dovish messages from Fed Chairman Jerome Powell’s remarks last week alongside a sharp rate hike. Americans by 75 basis points. Read more

The markets, however, were only half listening. Benchmark dollar and US yields maintained their recent gains, but equity markets decided to close their ears to the Fedspeak.

MSCI’s broadest index of Asia-Pacific stocks (.MIAP00000PUS) gained 0.5% in morning trade on Thursday after the S&P 500 closed up 1.5% (.SPX).

Strong earnings in the United States drove some of the gains, and investors in Europe will be looking to see if companies such as Credit Agricole (CAGR.PA), Lufthansa (LHAG.DE) and Bayer (BAYGn.DE) can maintain momentum. , with Chinese tech giant Alibaba expected ahead of the US open.

The end of Speaker of the House Nancy Pelosi’s visit to Taiwan has also helped ease some tensions, but only a little, as she continues her tour of geopolitical hotspots today with a trip to the border between South Korea North and South Korea. Read more

Key developments that should provide markets with more direction on Thursday include:

Bank of England meeting – decision expected at 11 GMT – along with remarks from Cleveland Federal Reserve Chair Loretta Mester and a Czech central bank meeting

Trade data from Australia, USA and Canada

European profits: ING, Crédit Agricole, Deutsche Lufthansa, Bayer

US Profits: CIGNA, Eli Lilly, Thomson Reuters Corp, , Duke Energy, Alibaba, ConocoPhillips, Kellogg Co, Amgen, Expedia, Wynn Resorts

WATCH-Bank of England torn between surge in inflation and recession risks –

Oil prices rebound on supply issues after falling nearly 6 months – read more

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Reporting by Alun John; Editing by Vidya Ranganathan

Our standards: The Thomson Reuters Trust Principles.

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