The FED destablised a market presuming the FED would remain accomodative for some time by signalling two rate hikes in 2023 and re-starting the debate over when to taper bond buying.

The reaction was larger presumably because the markets were positioned for an indifferent and unchanging FED and had to bail its positions quickly.

The confusion continued as Thursday’s jobless claims showed a rise but the focus remained on reducing short US$ positions.

The BoE could make fragile markets nervous again as despite the government losing a “safe seat” , Northern Ireland brexit continuing to be problematical and rising covid cases the economy and inoculation rollout are starting to look upwards which in turn may lead to the BoE signalling rate rises or at least tapering.

This week is light on data with only late in the week durable goods and GDP figures to watch but the market is clearly more concerned with central bank actions than figures, although it may use any stronger economic figures as a thing of fear since it could imply the FED may need to move rates earlier.  The spotlight thus falls on Lagarde and European council meetings and most importantly Powell testimony which has taken on a new level of sensitivity.

Commodities and more particularly metals had a very rough week with demand seemingly satiated and the holders of long positions being forced out. Many metals now are at the years opening levels and it will be interesting to see if investors still believe in the commodity super cycle or if they were merely buying on a “FOMO” (“Fear Of Missing Out”) basis…

Oil retained its recent gains as OPEC+ continue to look controlled and unified and as economies re-open as do other commodity markets such as lumber and grains.