skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

IFI_Monthly_Interest_Rate_Outlook_-_January_2018.pdf

Please find attached the January 2018 edition of the IGM Monthly Interest Rate Outlook.

Highlights:

In general, central banks are either already tightening policy or veering this way. The aim is not necessarily to dampen inflation, but keep the status quo. There simply is not the need for the volume of economic liquidity currently in the system. How the financial markets react is uncertain given the uncharted waters of a global balance sheet shrinkage.

  • One such issue is the short volatility trade which Senior Editor Marcus Dewsnap considers [Pages 2-4]. There is a risk that the stability of low vol, which is feeding itself, might in the face of a significant shock induce the sort of instability of a decade ago � who didn't read Minsky?
  • The BoJ is yet to signal any move towards normalizing policy. Governor Kuroda's term ends in April. The latter and YCC tweaks are the focus in the year ahead. Asia FX Analyst Jian Hui Tan suggest the signal for tweaks will be when the BoJ reduces purchases in the 3-5 and 5-10 year segments at the regular bond purchase operations [Pages 5, 8].
  • Meanwhile, normalization gathers pace at the BoC with FX Analyst Mark Mitchell echoing market sentiment that there is a high probability of an imminent rate hike as the economic outlook improves [Pages 5, 10-11]. This, as Technical Analyst Matthew Sferro suggests, will raise Canadian benchmark yields [Pages 5, 22].
  • At the Czech National Bank, Emerging Market Managing Analyst Chris Shiells writes, the question heading into the first meeting of 2018, is whether the CNB will hike rates by 25bp having held off in December. Then it is all about the pace of tightening for the rest of the year.

Recommended Articles

  • IGM FX and Rates

    FX Viewpoint - Seasonality in June?

    By Tony Nyman 03 Jun 2020

    The USD has been an across the board loser in the very early part of June. It's now time to take our customary look at previous June's to see if there are any trends worth looking out for. In particular, how does the US Dollar tend to perform during the month and are there any G10s that tend to perform particularly well/badly through June? For more read our EM Viewpoint Blog >

    Topics Industry News

  • IGM Credit, IGM FX and Rates

    Monthly Issuance Volume Statistics in the Asia Pacific US$ Corporate Bond Market

    03 Jun 2020

    This month, Credit Analysts Sylvia Xu and Andrew Perrin look at monthly issuance volume statistics in the Asia Pacific US$ corporate bond market across rating type, asset class and jurisdiction and more…

    Topics Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Messages From NPC Are Less Dovish Than Expected

    By Tim Cheung 02 Jun 2020

    The NPC ended on Thursday (28 May). In the post-NPC press conference, Premier Li Keqiang gave a couple of remarks: - China will not hesitate to loosen policy more if needed. The focus of the policy loosening is not on infrastructure but on consumption. It's worth noting that Premier Li, unlike in the past, this time didn't say he would maintain ample liquidity in the financial system. - Premier Li Keqiang did not agree with the market's statement that the planned policy package is not strong enough. He said the magnitude of the policy package is reasonable, indicating low possibility of aggressive stimulus in the near term. Overall, Premier Li's remarks reflect central government's intention to avoid being too dovish in the aftermath of COVID-19.

    Topics Industry News

;

Any questions? Speak to a specialist

Would you like to request sample data or analysis from Informa Financial Intelligence? 

See how our tailored solutions can help you gain a competitive advantage: