Global central banks expected to hike rates this week

Yahoo Finance’s Jared Blikre breaks down Wall Street’s expectations for upcoming central bank policy changes.

Video transcript

[AUDIO LOGO]

The Fed is the only game in town this week, but it’s worth remembering that nearly 90 central banks have raised rates this year, many by 75 basis points each. The global struggle to try to fight against inflation, against inflation. The Bank of England, the SNB and the risky banks come into action in the coming days. Yahoo Finance’s Jared Blikre is here to break it all down for us. Jared?

Jared Blikre: Yes, well, let’s look at the yield on 13-week Treasury bills. Because guess what? We have the Fed. It may be the only game in town, but we have other central banks that I suspect are making rate decisions this week.

And you can see, here’s a 113-week treasury bill yield. This tracks federal funds. This is the benchmark rate used by the Federal Reserve. You can see it’s only 3.02%.

When that hits 3.47% or whatever the 10yr is at that point, it will be a definite flattening at all levels of the yield curve, the short term along with the long term. Now, it can be seen here, testing highs from several months ago. But I just want to show you, I’ve put together charts from Bloomberg that explain exactly what’s going on with some of these central banks.

And first, we have to start with inflation data. So this shows consumer prices in the US, Eurozone and UK. And we can see that they have already reached a potential peak in the United States. They could bend again.

This is not the case with the EU. And with the UK, very high on the inflation meter. Now I want to show you, these are the countries in the world that have gone up 75 basis points, that is, 0.75 basis points or more all at once this year.

And you see, it’s quite a wide swath of the whole world here. Some commodity currencies such as the Australian dollar and the New Zealand dollar are notably absent. And here’s what’s happening this week. So lots of action.

But at the end of the day, people want to know when will the Fed and other central banks relax? And that’s kind of the key question here. And for that, I just want to show you some heatmaps regarding our currencies. It’s the US dollar.

This is how much the US dollar has gained against certain currencies around the world. Argentina and the peso, it’s up 40%. The US dollar is up 40%. Let’s look at the Turkish lira, it has increased by more than 30%.

And then here is the key, the Japanese yen. The US dollar is up more than 24% against the yen. And Akiko, we talked about it, at some point, it has to break. This needs to reverse, because there can’t be so much easing from one central bank, the yen.

So to answer the question we started with, what is a central bank we care about that will ease first? Well, maybe he’s already easing somehow because he hasn’t turned the screw, and that would be the Bank of Japan. So for me, that’s where the barometer is.

Yeah, I mean, you feel like the BOJ is in real trouble, right?

Jared Blikre: Yeah.

I mean, it’s largely the movement of the dollar. There’s not too much.

Jared Blikre: Well, when they are in the same class as the Argentine Peso and the Turkish Lira, yeah.

Yeah. We don’t often talk about all of these currencies, but this indicates where we are right now. Thank you so much for that, Jared.

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