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22 Jan 2016
A bullish tone creeping into markets - TDS
FXStreet (Guatemala) - Analysts at TD Securities explained that dramatic swings in global risk appetite continue to define—and dominate—activity across financial markets.
Key Quotes:
"This is likely to remain a key driver this week as Wednesday’s FOMC meeting looms large on the immediate horizon.
We downplay the risks of major changes to the FOMC’s overall message this month. We do see a moderately dovish shift in overall tone as likely, however, but one that remains in line with their overall bias to guide rates higher this year.
A more open question is whether the Fed will join some of its G10 central bank peers in taking steps to calm frayed nerves in markets. The ECB has put down the largest marker in that direction when Draghi took on a decisively dovish tone at last Thursday’s press conference.
One could argue, however, that Mark Carney stole a march on his colleagues across the Channel the day before in signalling a BoE rate hike was off the agenda for the foreseeable future.
It was Draghi, however, who nailed the bottom—so far—in risky assets. By signalling they would ‘reconsider’ their monetary policy stance at their next meeting in March, the ECB has helped put a floor under sentiment.
It is clear that while the global monetary policy backdrop is turning less friendly for investors, central bankers are not quite ready to force markets to go cold turkey after years of support – at least not yet.
As a result, a tentatively bullish tone has crept back into the market’s collective psychology."
Key Quotes:
"This is likely to remain a key driver this week as Wednesday’s FOMC meeting looms large on the immediate horizon.
We downplay the risks of major changes to the FOMC’s overall message this month. We do see a moderately dovish shift in overall tone as likely, however, but one that remains in line with their overall bias to guide rates higher this year.
A more open question is whether the Fed will join some of its G10 central bank peers in taking steps to calm frayed nerves in markets. The ECB has put down the largest marker in that direction when Draghi took on a decisively dovish tone at last Thursday’s press conference.
One could argue, however, that Mark Carney stole a march on his colleagues across the Channel the day before in signalling a BoE rate hike was off the agenda for the foreseeable future.
It was Draghi, however, who nailed the bottom—so far—in risky assets. By signalling they would ‘reconsider’ their monetary policy stance at their next meeting in March, the ECB has helped put a floor under sentiment.
It is clear that while the global monetary policy backdrop is turning less friendly for investors, central bankers are not quite ready to force markets to go cold turkey after years of support – at least not yet.
As a result, a tentatively bullish tone has crept back into the market’s collective psychology."