Market Commentary: Wednesday 20th March

An exciting day but first the activity overnight saw China leave its 5-year Loan Prime Rate at 3.95% and the 1-year rate at 3.45%, as expected. We have just seen UK CPI lower than expected at 3.4% yoy and GBP seems surprisingly supported on dips. Later today we have the eagerly awaited Fed Announcement, which is an hour ahead of the normal 7pm timeslot due to the clock changes and I hope doesn’t catch people out.

Now to the action, the Fed is widely expected to be unchanged but all eyes will be on the Dot Plot, at present we have 2 full 25bps cuts priced into the year end and slowly the market has become less dovish, why? Firstly the data -CPI; PPI; monthly payrolls; weekly initial jobless claims; house prices and energy trend would all suggest the Fed should not be cutting but then look at Retail Sales, weak industrial production and commercial real estate and they should. So this makes for a difficult Fed debate and forward-looking decision-making process is very tightly balanced and interesting. Secondly Politics, what if Joe Biden wins and keeps the fiscal taps open. What if Donald Trump wins re-election, and imposes tariffs? How does geopolitics respond? There are lots of unknowns and the press conference at 18.30 will be eagerly watched.

Ahead of the Fed announcement we have the ECB’s Lagarde speak, as does Lane, De Cos, and Schnabel, and Villeroy. We also get Eurozone consumer sentiment. Have a good day.

**For professional investors only** Any opinions, news, research, analyses, prices, or other information contained in this blog is provided as general market commentary and does not constitute (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Some of this information may have been provided by third-party sources and, although believed to be reliable, it has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation or warranty, expressed or implied, is made or given by or on behalf of iSAM Securities or its directors or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this blog, and no responsibility or liability is accepted for any such information. As a result, any person acting on any information does so entirely at their own risk. iSAM Securities will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.