{"id":19624,"date":"2022-02-01T09:17:21","date_gmt":"2022-02-01T07:17:21","guid":{"rendered":"https:\/\/bestinsurance.gr\/a1\/?p=19624"},"modified":"2022-02-01T02:24:23","modified_gmt":"2022-02-01T00:24:23","slug":"traders-dare-boe-ecb-with-rate-hike-bets-ahead-of-key-decisions","status":"publish","type":"post","link":"https:\/\/bestinsurance.gr\/a1\/archives\/19624","title":{"rendered":"Traders Dare BOE, ECB With Rate-Hike Bets Ahead of Key Decisions"},"content":{"rendered":"<section>\n<ul>\n<li><span style=\"color: #000000;\">Money markets see 125bps of hikes by BOE, 25bps by ECB in 2022<\/span><\/li>\n<li><span style=\"color: #000000;\">Leads to renewed bond selloff, puts pressure on policy makers<\/span><\/li>\n<\/ul>\n<\/section>\n<section><span style=\"color: #000000;\">By\u00a0Libby Cherry\u00a0and\u00a0James Hirai<\/span><\/p>\n<p><span style=\"color: #000000;\">(Bloomberg) &#8212;\u00a0<\/span><span style=\"color: #000000;\">European markets are awash with hawkish enthusiasm, as traders bet on the fastest pace of policy tightening in more than a decade from the Bank of England and the European Central Bank ahead of their rate decisions on Thursday.\u00a0<\/span><\/section>\n<section><span style=\"color: #000000;\">Money markets are wagering on the BOE raising rates five times by 25 basis points and a move of that magnitude from the ECB by December. That spurred a renewed selloff in bonds across the continent, and challenges ECB policy makers including President\u00a0Christine Lagarde\u00a0who have pushed back against the idea of raising borrowing costs this year.\u00a0<\/span><\/p>\n<figure><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-19626\" src=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.14.40.jpeg\" alt=\"\" width=\"1008\" height=\"603\" srcset=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.14.40.jpeg 1008w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.14.40-300x179.jpeg 300w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.14.40-260x156.jpeg 260w\" sizes=\"auto, (max-width: 1008px) 100vw, 1008px\" \/><figcaption>\n<div><\/div>\n<\/figcaption><\/figure>\n<p><span style=\"color: #000000;\">Markets are assuming sentiment at the BOE and the ECB could have evolved following the Federal Reserve\u2019s hawkish shift. Policy makers will have a tricky time to balance the need to cool inflation running at the hottest in decades, while not hurting economies recovering from the pandemic or provoking market volatility.<\/span><\/p>\n<p><span style=\"color: #000000;\">\u201cThe ECB had a narrative that the peak inflation print was December and inflation would cool over the course of the year,\u201d said\u00a0Rohan Khanna, a rates strategist at UBS Group AG. \u201cWhile this may still prove true, today\u2019s upside surprise to German inflation and hence upside surprise to tomorrow\u2019s euro-zone HICP print imply that the ECB would also have to revise their forecasts upwards.\u201d<\/span><\/p>\n<p><span style=\"color: #000000;\">Two-year and five-year German yields &#8212; the most sensitive to interest-rate rises &#8212; saw their biggest jumps since March 2020 on Monday, while the benchmark 10-year yield broke into positive territory for the second time this month. That presages an end to an era of negative rates, with the ECB having last hiked in 2011.<\/span><\/p>\n<figure><figcaption>\n<div><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-19625\" src=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.16.09.jpeg\" alt=\"\" width=\"1058\" height=\"602\" srcset=\"https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.16.09.jpeg 1058w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.16.09-300x171.jpeg 300w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.16.09-1024x583.jpeg 1024w, https:\/\/bestinsurance.gr\/a1\/wp-content\/uploads\/2022\/02\/WhatsApp-Image-2022-02-01-at-02.16.09-260x148.jpeg 260w\" sizes=\"auto, (max-width: 1058px) 100vw, 1058px\" \/><\/div>\n<\/figcaption><\/figure>\n<p><span style=\"color: #000000;\">For the BOE, which kicked off its hiking cycle in December, traders are focusing on the pace of rate rises going forward. Money markets have priced in as many as five full hikes to take the key interest rate to 1.5% by year-end.<\/span><\/p>\n<p><span style=\"color: #000000;\">Traders haven\u2019t priced in such an aggressive timeline of hikes since at least 2008. There\u2019s also a widening split between the market and economists, who\u00a0see\u00a0the BOE\u2019s key rate only reaching 0.75% in December.\u00a0<\/span><\/p>\n<p><span style=\"color: #000000;\">While\u00a0inflation\u00a0is at the highest in 30 years, a fast rise in borrowing costs would hurt U.K. households facing an increase to taxes and energy bills from April. The cost of living is adding to pressure on Prime Minister Boris Johnson, already fighting for his survival after a report into\u00a0rule-breaking\u00a0parties by his officials during lockdown.<\/span><\/p>\n<p><span style=\"color: #000000;\">Bond investors aren\u2019t hanging around, dumping gilts to send the U.K.\u2019s two-year yields above 1% for the first time since 2011. A Bank rate at that level would be especially significant for markets, as the point at which policy makers said they would consider the active sale of gilts &#8212; an unprecedented step for the central bank.<\/span><\/p>\n<p><span style=\"color: #000000;\">\u201cWe don\u2019t expect the BOE to tighten as quickly as the Fed,\u201d said\u00a0Peder Beck-Friis, a portfolio manager at Pacific Investment Management Co., seeing greater inflationary risks in the U.S. \u201cThat said, if the Fed speeds up its hiking pace we would expect the BOE to up its pace too.\u201d<\/span><\/p>\n<\/section>\n<section>&nbsp;<\/p>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>Money markets see 125bps of hikes by BOE, 25bps by ECB in 2022 Leads to renewed bond selloff, puts pressure on policy makers By\u00a0Libby Cherry\u00a0and\u00a0James Hirai (Bloomberg) &#8212;\u00a0European markets are awash with hawkish enthusiasm, as traders bet on the fastest pace of policy tightening in more than a decade from the Bank of England and<\/p>\n","protected":false},"author":1,"featured_media":19628,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-19624","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/19624","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/comments?post=19624"}],"version-history":[{"count":1,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/19624\/revisions"}],"predecessor-version":[{"id":19627,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/19624\/revisions\/19627"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media\/19628"}],"wp:attachment":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media?parent=19624"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/categories?post=19624"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/tags?post=19624"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}