22 February 2024
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FOMC minutes confirm hawkish stance

Daily Outlook 22 February 2024

By Jeanne Walters

FOMC minutes from the January 31 meeting, at which rates were kept on hold at an upper bound of 5.5% highlighted that the committee was concerned about cutting rates too quickly. This was consistent with the hawkish message delivered by Fed Chair, Jerome Powell, at the press conference after the January decision. The minutes flagged that committee members were “highly attentive” to the risk that inflation might begin rising again. Some officials did however note downside risks to the economy from holding rates unchanged, with attention being given the higher delinquency rates on credit cards and auto loans. The committee provided no further evidence of what conditions would be required for them to start cutting rates. Our expectation remains that there will be three rate cuts in 2024, starting from the June FOMC meeting.

The preliminary estimate of the Eurozone consumer confidence index rose marginally, to a value of -15.5 in February, from -15.9 in January. It appears likely that the impact of increased industrial action in the Eurozone, on consumer confidence, is being offset by rising equities and a stabilization of mortgage rates.

The Jibun Bank Japan PMI composite index fell to 50.3 in February, just above the neutral-50 mark, from a value of 51.5 in January. The decline was driven by falls in both the manufacturing and services sub-components. The fall in manufacturing, to a value of 47.2 in February from 48, took the index to its weakest level since August 2020.

Today’s Economic Data and Events

  • 13:00 EC HCOB composite PMI, Feb. Forecast: 48.4
  • 14:00 UK S&P Global composite PMI, Feb. Forecast: 52.9
  • 14:00 EC CPI, Jan. Forecast: 2.8% y/y
  • 15:00 TU one-week repo. Forecast: 45%
  • 17:30 US initial jobless claims, w/e Feb 12. Forecast: 216K

Fixed Income

  • US bond yields rose on Wednesday, following the release of hawkish FOMC minutes which shows officials’ concerns about cutting too soon. The 2yr yield rose 5bps to 4.666%, while the 10yr yield gained 4bps to 4.3187%.
  • Major European bond yields were also higher on the day. Yields on the 2yr Gilt gained 8 bps to 4.6151% and the 10yr gilt yield rose 6bps to 4.1026%. The 10yr bund yield rose 8bps to 2.448%.


  • EURUSD gained 0.1% to 1.0819 while GBPUSD rose 0.12% to 1.2638. USDJPY gained 0.2%, reversing the previous two day’s fall to reach 150.3.
  • Commodity currencies were stronger against the dollar on Wednesday. AUDUSD gained marginally, rising 0.03% to settle at 0.6551, NZDUSD added 0.24% to reach 0.618 and USDCAD fell 0.13% to 1.3506.


  • US equity markets were mixed on Wednesday, with chipmakers shares reversing yesterday’s gains. The Dow Jones and S&P 500 both gained 0.13%, while the NASDAQ dropped by 0.32%. Markets have rallied in early Asian trade, on the back of a positive outlook from Nvidia.
  • European equity markets mostly gained on the day. The Eurostoxx 50 index rose by 0.32%, the CAC 40 gained 0.22% and the DAX increased 0.29%. The FTSE 100, in contrast, fell 0.73%.
  • Locally, the DFM fell 0.52% while the ADX dropped by 0.17%.


  • Oil markets are continuing to try to balance risks surrounding weaker demand out of China against tensions in the red sea, with Brent futures gaining 0.84% to USD 83.03/b, while WTI fell 0.35% to USD 77.91/b.

Written By

Jeanne Walters Senior Economist

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