Market Recap – BOE monetary meeting

There are three points to be made from yesterday’s FOMC. (i)The FED will start decreasing repo and T-Bill purchases on April. (ii) It appears that the lower level for an ample degree of reserves is the $1500bn level. This should make sure that market participants do not experience another spike of the overnight repo rate, as it happened during the last September. (iii) The IOER (interest on excess reserves) was set 5bps higher and now stands at 1.60%.

FED reserves published by Timareos 030120

As of now, the laid out exit strategy from repo and T-bill purchases, has been digested by traders without sending USD higher.

Cryptocurrencies are aggressively moving higher during the last couple of days. Bitcoin is recording +29% rally year to date.

Today it is the Bank of England’s (BOE) turn to have its monetary meeting. At the last press conference of Mark Carney (as his term ends) and the penultimate day before the UK officially leaves EU, the stakes are high. There is 45% chance that a rate cut could be announced today, and that could potentially send GBP lower.

Macro releases & Earnings:  Other than the BOE’s meeting, today’s economic calendar includes the US advance GDP q/q reading. Yesterday’s Facebook, Microsoft and Tesla earnings calls have been positive.


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