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Around the world economies
Insights into monetary policy and interest rate possibility
US 10-year Treasury note yield dips below 4.28%.
Traders await FOMC minutes and Fed official comments.
BOE Governor signals openness to rate cut.
ECB data shows moderated wage growth in euro area.
RBA considers rate hike but opts for status quo.
The yield on the US 10-year Treasury note commenced a truncated trading week marginally lower, hovering below 4.28%, as market participants braced themselves for insights from the Federal Open Market Committee (FOMC) minutes and remarks from several Federal Reserve officials. Investors eagerly await further cues regarding the potential timing of the first interest rate adjustment by the Fed. Concurrently, bond yields across Europe also experienced a decline, with Germany's benchmark 10-year yield retreating to 2.38%.
United Kingdom
Andrew Bailey, Governor of the Bank of England (BOE), indicated that the central bank may not necessarily wait for inflation to meet the 2% target before considering a rate cut. Bailey noted that current market expectations for rate adjustments are rational, with traders pricing in three potential rate cuts throughout 2024.
European Union
Recent data from the European Central Bank (ECB) revealed a moderation in negotiated pay within the euro area, registering a 4.5% increase at the close of 2023. This figure marks a slight deceleration from the preceding quarter's record high of 4.7%, allaying concerns that surging wages might perpetuate inflation beyond target levels.
Australia
Minutes from the Reserve Bank of Australia's (RBA) initial meeting of the year disclosed that while deliberations included the possibility of raising interest rates, the prevailing stance to maintain current rates was deemed the more compelling approach. The decision was underpinned by easing inflationary pressures, as highlighted in the minutes from the February 6 meeting.
China
In a noteworthy development, the People's Bank of China (PBoC) implemented a substantial reduction in its reference rate for mortgages, known as the 5-year loan prime rate, by 25 basis points to 3.95% during the February fixing. This adjustment surpassed market forecasts, which anticipated a more conservative 15-basis-point decrease. Notably, this move marks the first rate cut since June 2023 and represents the most significant reduction since the rate's inception in 2019.
Canada
The annual inflation rate in Canada fell to 2.9% in January of 2024 from 3.4% in the previous month, well below market expectations of 3.3% to record the first reading below the 3% threshold since March of 2021.
