From Marc to Market:
The market seemed to overreact to the central bank meetings this week. The market heard Fed Chair Powell as more hawkish than the FOMC statement and took the dollar sharply higher. Yesterday, it overreacted to the Bank of England and European Central Banks and sold the greenback aggressively. The swaps market is discounting three rate hikes this year by the ECB and BOE, and about three basis points of tightening by the Federal Reserve.
Still, after yesterday’s sell-off the dollar has bounced back. The fog of war seems to contribute to the desire for short-term market participants not wanting to be short dollars into the weekend. Even though the US and Israel say that they will not strike Iranian oil infrastructure, there is little sign of de-escalation and yesterday, US Treasury Secretary Bessent made a reference to the possibility that Kharg Island could be taken over by the US. Adding to the mix is today’s “triple-witching” that see a relatively large, $5.7 trillion of options on individual stocks, indices and exchange-traded funds expire. This comes amid a further sell-off in stocks and bonds....
....MUCH MORE
