by Tyler Durden
Wednesday, May 05, 2021 - 02:59 PM
One week after he wrote that early indications point to a 1.5 million jobs number, Standard Chartered s Global head of FX Research, Steve Englander has published an even more important report, one looking at
what jobs number would scare investors into believing the economy is overheating even more than is accepted, and spook stocks into a selloff. Englander s summary:
2 million+ April job additions are needed for investors to see risk that the Fed changes its stance; Meanwhile, the widely expected whisper range of 1.0-1.5 million jobs may not be enough for the Fed to shift, even if jobs exceed the 1mn consensus. Of course, the bar for a job growth surprise is higher if 10Y UST yields are above 1.60%, which is not too far from today s 1.59% yield.
by Tyler Durden
Be Steve Englander, head global G10 FX at Standard Chartered
The Fed put a lot of effort after the March FOMC meeting into convincing bond investors that it was not thinking of changing its view of low inflation and low policy rates through 2023.
There is increased optimism but not additional economic data since, so we think the Fed will try and keep the message as unchanged as possible. The lack of bond yield reaction to sharp data surprises has led investors to be cautious on the immediate upside to bond yields.
Real yields are almost 20bps lower than at the March FOMC (Figure 1). There is no real appetite to fight the Fed now and the Fed has little incentive to rock this boat just yet.
Inflation forces Bank of Canada s hand ahead of Fed and ECB bnnbloomberg.ca - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from bnnbloomberg.ca Daily Mail and Mail on Sunday newspapers.
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The Bank of Canada sent out a warning to investors this week that inflation still matters.
In a surprise move, it accelerated the timetable for a possible interest-rate increase and began paring back its bond purchases on Wednesday. That made Canada the first major economy to signal its intent to reduce emergency levels of monetary stimulus.
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It’s a turn in policy by Governor Tiff Macklem that shows there’s a limit to how much he’s willing to test the upper boundaries of inflation, with new forecasts showing the central bank expects the biggest persistent overshoot of its 2 per cent target in at least two decades. The question is whether Canada’s situation is unique, or foreshadowing the start of a global exit from stimulus.