Last weekend, the shocking news of the bankruptcy of a US commercial bank flowed. (Silicon Valley Bank) and others were in financial trouble, and stock trading was suspended, effectively bankrupting them. Over the weekend, the US Federal Deposit Insurance Corporation (FDIC) announced that it would take a “method to fully protect all depositors,” and the risk of a chain reaction of bankruptcies seems to have settled down. However, since the financial authorities’ rapid interest rate hikes are an underlying cause, the roots of anxiety are likely to remain around the world. We cannot take our eyes off future trends. Markets have tended to seek refuge in credit-worthy bonds such as U.S. Treasuries.
Nearly 100% of the U.S. money markets are expecting a 25bp rate hike at the FOMC in March. The speculation of a 50bp rate hike has disappeared, and conversely, there are some speculations that the Fed will remain unchanged.
At this timing, the February US consumer price index will be announced tomorrow. The current market forecast is +6.0% (previous +6.4%) and core +5.5% (+5.6%) year-on-year. Although it is expected to slow down, core year-on-year growth is expected to remain at roughly the same level. Of course, it all depends on the outcome, but in a situation where US bond yields are being squeezed by financial instability, it is expected that there will be a greater reaction to dollar selling when inflation slows down. Conversely, if deep-rooted inflation is shown, the direction of the dollar exchange rate will likely be mixed as the initial reaction to dollar buying will spread.
With the bankruptcy of the US bank, the JPY, CHF, and GOLD became stronger, and the movement of risk aversion became clear. After this, President Biden has announced that he will make a speech at 8:00 am local time, so it is assumed that the price movement will increase here as well.
Be careful because the return may also enter suddenly.