بنك أر بى اس حول الفيدرالى اليوم
The FOMC decision on Wednesday will include a rate decision along with a post-decision
press release but the FOMC will not release new forecasts this week nor will Fed Chair
Yellen give a post decision press conference. In the end, we don’t see tomorrow’s
statement as a “game changer” for the USD. There is little doubt that market participants
expect a dovish tone in the statement in light of the further moderation in economic
indicators since the FOMC last met, and we agree. With the rates market pricing the first
full rate hike out of December and the USD Index testing its lowest level since early
March, we see the market as well prepared for a dovish tinge from the FOMC statement.
The FOMC is moving to pure data dependence, and in a data dependent environment the
value of FOMC signaling and communication is diminished because the FOMC appears
less willing to pre-commit to policy. In the end, we think the USD will be driven by the
incoming economic data, including GDP data released just hours before April’s
statement. Our economists are below the consensus looking for a 0.8% q/q annualized
growth rate in the first quarter. Our economists expect a broad based moderation relative
to the fourth quarter, though investment in infrastructure (largely in the energy sector) and
net exports (stronger USD) may be the largest first quarter drags.
We expect a 15bp rate cut and an extension of asset purchases at the Riksbank policy
announcement. Not easing policy further would risk the SEK strengthening and
potentially undoing progress made thus far with respect to returning inflation back to
target. The Board may feel emboldened by signs its policies are working and continue on
the same course, in our view. According to Bloomberg, analysts are fairly evenly split
between expecting an unchanged policy rate and a small cut, while RIBAs suggest
roughly 7bp of easing is priced in. With oil prices still resilient, suggesting Norges Bank
may continue to drag its feet on further easing, we continue to like being long NOK/SEK.
The RBNZ decision is due late in the US afternoon tomorrow (Thursday morning local
time) and after RBNZ Assistant Governor McDermott gave surprisingly dovish comments
last week, the stage appears to be set for a more cautious RBNZ, as the Bank may waver
in its estimate of the output gap given the persistent lack of price inflation pressure
despite a strong economy. At the same time, the NZD has remained elevated despite a sharp decline in dairy prices since the Bank last met in March – that may leave the RBNZ scope to step up its rhetoric about a strong currency. With RBA Governor Stevens sounding more neutral on the costs and benefits of a rate cut in Australia given the already high amount of leverage and the RBNZ moving more clearly dovish, relative yields could support a further correction higher in AUD/NZD.
The BCB COPOM decision is also due late in the US afternoon tomorrow, likely after the close. The local rates DI curve is now pricing in +46 bp in the May contract and +34 bp in the June contact. This is slightly lower than the +53 bp and +40 bp hikes priced into the local DI curve one month ago. We expect a +25bp hike in the Selic policy rate to 13.00% in tomorrow's meeting. This is a revision from our initial call for a 50bp hike due to the declining forecasts since the last COPOM meeting for economic activity in 2015 and more recently to the strength of BRL dipping below 2.90. Lower growth should lead to some improvement in the medium term inflation x growth balance. We were also pricing in a final 25bp hike in March to 13.25% ending the tightening cycle, though recent gains in BRL has reduced our conviction for that last move.