Market Information Thursday 14 December 2023

The U.S. Federal Reserve anticipates a 0.75% decrease in the policy rate next year, while the current rate remains unchanged within a range of 5.25% to 5.50%. The markets responded positively; during the press conference, the S&P 500 index rose by over 1%, and interest rates also declined. Fed Chair Powell expects no further interest rate hikes and envisions inflation under control by 2026 without a recession. He emphasizes that the battle against inflation is not yet won and seeks more confirmation.

Argentina is adapting to the 54% mega-devaluation implemented by President Javier Milei to combat the economic crisis and inflation. The devaluation, part of a cost-cutting package, has garnered support from financial markets and the IMF, but will impact the population financially in the short term. The official exchange rate is now 800 pesos per U.S. dollar, compared to nearly 400 previously. The devaluation aims to boost exports and enhance economic competitiveness. Higher import taxes aim to improve the trade balance and restore dollar reserves.

On Thursday morning, most Asian markets showed gains following new record levels on Wall Street. However, the Japanese Nikkei 225 declined by almost 1%, influenced by the stronger yen in response to expectations of U.S. interest rate cuts, impacting the competitiveness of Japanese exporters. Conversely, Sydney and Seoul rose by 1.7% and 1.2%, respectively. Hong Kong and New Delhi gained around 1%, while Shanghai recorded a slight decline.

The 6M Euribor is unchanged at 3.96% compared to previous business day. The 10Y Swap decreased with 7 basis points to 2.64% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.