Yields on core European bonds went for a slide yesterday as prices rose in response to the ECB's decision to leave its QE programme unchanged – for now at least. Elsewhere, the USD continues to make gains on its peers.
Squawk / 15 June 2016 at 18:06 GMT
Head of FX Strategy / Saxo Bank
Initial market reaction is USD bearish as focus perhaps on one FOMC dissenter joining the decision to not hike rates. Nothing terribly dovish to the alterations in the statement itself as seen attached using Microsoft word comparison. But the dot plots shows six Fed officials expecting one rate hike this year versus only one in March. Will be back shortly with more thoughts.
15 June
John J Hardy John J Hardy
Headline assessment of forecasts looks indifferent on balance - growth and Fed Funds rate marginally lowered, while inflation raised - hardly anything changed for 2018 except fed funds rate projection (seen as a capitulation and the key driver of the initial reaction). All clearly pointing to total data dependence and we'd be best off admitting these forecasts are all more or less worthless beyond the near term reaction function. Yellen's tone at the presser the next key.

On the economic forecasts, we have GDP projection lowered -0.2% for 2016 and -0.1% for 2017, while unemployment rate forecast same except for 2018, where it was raised to 4.6% from 4.5% (come on, really?). Interestingly, the PCE inflation forecasts were raised for both headline and core for 2016 and for the core (to 1.9% from 1.8%) for 2017, while unchanged at 2.0% for 2018.

The Fed Funds rate projections lowered to 1.6% for next year from 1.9% in March and 2.4% in 2018 from 3.0% in March.
15 June
John J Hardy John J Hardy
Later comment in Q&A: seems to say that a sufficiently impressive labor market report in coming month enough for FOMC to pull trigger and that every meeting is live has the USD clawing back some of its losses. Still overall message is total data dependency - happy to hike, but have to see the data to do so.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail