Seven major global central banks, including the Federal Reserve, will make interest rate announcements this week. But only two were expected to make potentially meaningful changes to their current monetary policies.
The first happened late last night when the Bank of Japan (BoJ) raised its overnight unsecured call rate for the first time in 17 years to a range of 0% to 0.1% from –0.1%, making it the last of the global central banks to move away from negative interest rates. As expected, BoJ also abandoned its yield curve control policy, which targeted longer-term interest rates.
However, the BoJ did state it will continue to purchase about six trillion yen in government bonds per month. Japan’s central bank also announced it would scale back or stop purchasing exchange-traded funds and real estate investment trusts and look to phase out over time the purchase of corporate bonds and commercial paper.
The other nation poised for significant policy change is Switzerland. The Swiss National Bank (SNB) holds its monetary policy meeting on Thursday.
Switzerland is experiencing inflation running below target at 1.2% annually, while its gross domestic product is running at a relatively weak 0.6% annually. Analysts have said these conditions have provided room for the SNB to cut its policy rate from highs last seen in 2008.
While interest rate markets are only pricing in a 30% probability of a Swiss rate cut on Thursday, some believe the SNB could make a preemptive cut due to a long time lag until the next SNB meeting in June and the possibility of a European Central Bank (ECB) rate cut in May.
An ECB cut ahead of the SNB could spark a bid into the Swiss Franc, which is not what SNB officials would want to see.
This morning, U.S. stock index futures were mixed in the early hours with the Dow Jones Industrial Average® (+0.02%) higher, but the S&P 500® (–0.09%), the Russell 2000® (–0.15%) and the Nasdaq-100® (–0.2%) lower.
In Asia, the major indexes finished mixed with the Nikkei (+3.05%) trading higher, but the Shanghai (–0.41%) and the Hang Seng (–0.06%) ending lower.
European trading was mixed by midday with the DAX (+0.05%) and the FTSE (+0.1%) higher, but the CAC (–0.05%) lower.
Futures on the move
Crude oil futures (/CLJ24) closed higher on Monday (+2.07%), trading above $82 for the first time since October. Organization of the Petroleum Exporting Countries (OPEC) member Iraq announced it would lower oil exports to 3.3 million barrels per day in the coming months after exceeding its OPEC quota since January.
Copper futures (/HGK24) prices rose to start the week (+0.13%) and traded at its highest level in 11 months on Monday. The red metal found buying interest tied to better-than-expected economic data from China, where industrial output rose by 7% annually in January and February versus expectations for a 5% rise.
Cocoa futures (/CCK24) closed in the green on Monday (+1.92%) with the lead month May contract trading above the $8,000 per ton level. Cocoa prices have doubled since the start of 2024 as production issues in West Africa due to weather issues and crop disease are expected to extend the global supply deficit throughout 2024.
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