- Federal Reserve leaves rates unchanged, as expected
- Powell: Quite a bit of room to raise rates without hurting jobs
- Fed releases separate note on the balance sheet
- The full statement from the January 2022 Fed Decision
- Bank of Canada holds rates at 0.25%
- Macklem opening statement: Rates will need to go up to control inflation
- Full text: Bank of Canada rate decision January 26, 2022
- Macklem Q&A: Wanted to be deliberate and clear rather than hiking now
- US December new home sales 811K vs 759K estimate
- US December advance goods trade balance -101B vs -96B expected
- US sees "every indication" Russia intends to use force in Ukraine in next few weeks
- UK defense min: If Putin invades Ukraine he shouldn't be rewarded via further gas income
- Russian envoy sees positive signs on Iran nuclear deal
- Blinken: Americans in Ukraine should strongly consider leaving
- Atlanta Fed GDPNow rises to 6.5% from 5.1%% last
- Supreme Court Justice Stephen Breyer is to retire
- OPEC+ will likely stick to output hike plan next week - report
- US advanced wholesale inventories for December 2.1% versus 1.3% estimate
Markets:
- Gold down $30 to $1816
- US 10-year yields up 7 bps to 1.85%
- WTI crude oil up $1.04 to $86.63
- S&P 500 flat at 4354
- USD leads, JPY lags
There was plenty to digest today but the main event was the FOMC. The statement was vanilla but there were hints of what to come with a surprise statement on balance sheet principles. That kicked off some minor jitters.
The real fireworks came from Powell who made no effort to temper a hawkish message. He said rates can rise 'quite a bit' before hurting employment, he said he would be inclined to boost his inflation forecast this year 'a few tenths' with upside risks and didn't even rule out moving by 50 bps, something that even hawk Waller recently ruled out.
The dollar surged on the hawkish turn, bond yields jumped led by the front end and stocks crumbled, giving up big gains.
Commodity currencies were hit especially hard with AUD/USD down to 0.7100 from 0.7170. The euro also sank to the worst levels since December 15, dropping to 1.1241 from 1.1295.
It was a broad USD rally, with USD/JPY even adding 40 pips.
Earlier in the day, the BOC delivered a somewhat surprising hold but that was talked back a bit with hawkish commentary that makes it very clear that a hiking cycle is starting in March. That helps explain why the loonie remains near the top of the G10 pile, with a hefty dose of help from the oil market hitting 7 years highs.
