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Surprise 50 basis point rate hike from Banxico this afternoon – widened the yield differential against the dollar, and kicked the peso higher. More here: Bloomberg: Mexico Stuns Markets With Half-Point Rate Hike on New Inflation Gain
In what could become its last move in this tightening cycle, the Bank of Canada lifted its benchmark overnight rate by a quarter percentage point to 4.50 percent this morning, while clearly setting the stage for a conditional pause at coming meetings. In the statement accompanying the decision, the central bank said “The Bank’s ongoing program of quantitative tightening is complementing the restrictive stance of the policy rate. If economic developments evolve broadly in line with the MPR (Monetary Policy Report) outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of...
US consumer prices fell as expected in December, lending more plausibility to the Federal Reserve’s “soft landing” scenario, while leaving longer-term interest expectations largely unmoved relative to pre-release levels. According to data published by the Bureau of Labor Statistics this morning, the headline consumer price index rose 6.5 percent in December from the same period last year, down -0.1 percent on a month-over-month basis. Economists polled by the major data providers ahead of the release projected a 6.5 percent annual gain and a -0.1 percent drop relative to November. A seasonally-adjusted -9.4 percent month-over-month drop in gasoline prices did a...
223,000 jobs were created in the United States last month, and the unemployment rate fell further – giving the Federal Reserve further motivation to raise rates. According to data released by the Bureau of Labor Statistics this morning, the unemployment rate dropped to 3.5 percent in December, and the participation rate moved up to 62.3 percent from 62.1 in the prior month, indicating that some workers are coming off the sidelines. Average hourly earnings rose 4.6 percent year-over-year, slower than expected, but still well beyond levels that would suggest inflation pressures have receded. Ahead of the release, investors were positioned...
American households slowed spending last month but the Federal Reserve’s preferred inflation measure exceeded expectations, bolstering the case for continued tightening in 2023. Data released by the Bureau of Economic Analysis this morning showed inflation-adjusted household outlays were unchanged in November, decelerating sharply from the 0.5-percent gain posted in the prior month. Markets had expected a print closer to 0.2 percent. Personal income rose 0.4 percent month-over-month, led by a 0.5-percent increase in private sector wages and salaries. Incomes are 4.7 percent higher relative to the same month last year. The core personal consumption expenditures index – targeted by the...