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CAD

Markets Retreat on Expected Fed Hawkishness

Markets are trading with a negative bias as traders brace for a hawkish message from Jerome Powell during this morning’s Congressional testimony. If the Federal Reserve chair joins his colleagues in arguing that there’s no rush to start cutting rates, investors will begin betting on an upward shift in the central bank’s policy projections. It would take only two officials turning more cautious to lift the median March “dot plot” toward showing just two rate cuts this year, down from the three previously expected. Treasury yields are holding steady, and the dollar is little changed against most of the majors....

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Caution Prevails as Fed Officials Make Hawkish Noises

Risk appetite is fading ahead of the North American open as traders brace for a more hawkish turn from Jerome Powell during tomorrow’s semi-annual Congressional testimony. Officials seem to be growing uncomfortable with the recent easing in financial conditions. Federal Reserve Bank of Atlanta President Raphael Bostic last night suggested that the central bank’s first rate cut was likely to land in the third quarter, with a pause followed by moves spaced out over time. “Given the uncertainty,” he said, “I think there is some appeal to acting and then seeing how participants in the markets, business leaders, and families...

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Markets Go Quiet Ahead of Busy Week

Activity in the currency markets remains muted ahead of what could become a dangerous week for believers in the “soft landing” consensus. The dollar is inching higher against most of its major rivals, and ten-year Treasury yields are sitting near the 4.2 percent mark, recovering somewhat after losing altitude toward the end of last week. Data out on Thursday showed monthly core inflation accelerating in January, but this seemed mainly driven by idiosyncratic factors that are unlikely to repeat themselves. Social Security cost-of-living adjustments and a rise in stock market valuations helped lift personal incomes, but pay growth slowed. On...

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March Comes In Like a Lamb

Happy Friday. A relief rally, triggered by yesterday’s on-consensus personal consumption expenditures release, is losing momentum across financial markets this morning. North American equity futures are in neutral gear, two- and ten-year Treasury yields are down, and the dollar is essentially unchanged relative to its major counterparts. The “soft landing” thesis has dodged another bullet. With yesterday’s strong headline print largely discounted in markets after hotter-than-expected consumer and producer price releases, investors breathed a collective sigh of relief when their worst fears went unrealized, and were further calmed when the Federal Reserve’s Bostic and Goolsbee later indicated a willingness to...

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Investors Heave Sigh of Relief As Worst Fears Go Unrealized

The Federal Reserve’s preferred inflation measure accelerated in January, helping further ratify the Federal Reserve’s cautious stance on rate cuts. Data released by the Bureau of Economic Analysis this morning showed the core personal consumption expenditures index rising 0.4 percent in January from the prior month, bringing the three-month annualized pace up to 2.6 percent – still within the central bank’s target range but headed in the wrong direction. On a year over year basis, base effects saw core price growth slowing to 2.8 percent from 2.9 percent prior, closely aligning with consensus estimates.  The overall personal consumption expenditures index...

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