Market Commentary: Thursday 21st March

The FOMC decided to keep the target range for the federal funds rate unchanged at 5.25-5.50% as widely predicted. It is still anticipated that there will be three rate cuts this year and asset prices acted favourably - S&P closed up 1% at 5224, Cable bounced off the support levels and opens close to 1.28, Bitcoin is at 67,000, West Texas Intermediate crude rose 0.6% to $81.79 a barrel and Gold is at $2203 an ounce. In the press conference Powell interpreted the recent overshoot in inflation data as “bumps in the road.” He stressed that an unexpected weakening of the labour market could also be a reason to cut and now we have to we have to sit and wait, personally I think the November Elections will be the bigger bump.

As for today we have the BOE, after yesterday's slightly better set of inflation data we are expecting rates to be unchanged at 5.25% and the chances of a 3 way split minimised. In a speech from Rachel Reeves, the Shadow Chancellor of the Exchequer the next Labour government will embrace industrial policy to ensure a boom in investment spending but will this be inflationary. In a similar vain to the US, politics looks to be the stumbling block.

Elsewhere today we see Nike and FedEx earnings, UK public borrowing, European PMIs, US existing home sales, the Philly Fed, and weekly initial claims. Have a good day

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