Daily Alert – Thursday 4th November 2021: Predictable Fed, BoE later

Mark NugentDaily Alert, Nov 2021

Daily Alert – Thursday 4th November 2021: Predictable Fed, BoE later

Good morning traders.

The Fed announced tapering of UYSD15bln/week as expected and commented that they “can be patient on tightening”. This refers to interest rates. The message they are trying to get across is that the end of the tapering, in mid-2022, will NOT automatically lead into an interest rate hiking cycle. Predictable, equities rose, and the USD fell. More surprisingly, bonds did absolutely nothing.

I was not tempted into US equities yesterday as the rally had clearly petered out within two hours of the Fed announcement. I am currently looking at WTI long, which is recovering from a significant drop yesterday.

At lunchtime today, it’s the Bank of England’s turn. All the narrative for weeks indicates the bank will increase the interest rate, despite the very limited impact this will have on inflation. Should sense prevail and rates remain unchanged, the GBP is likely to fall. I’ll be looking out for that, but I fear the bank has talked itself into acting, despite faltering growth in the economy.

Have a good weekend when it comes. We’ll be back on Monday.

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