You have reached the cached page for https://www.bloomberg.com/news/videos/2022-01-26/fed-will-signal-to-markets-a-move-in-march-state-street-video

Below is a snapshot of the Web page as it appeared on 4/19/2024 (the last time our crawler visited it). This is the version of the page that was used for ranking your search results. The page may have changed since we last cached it. To see what might have changed (without the highlights), go to the current page.

Bing is not responsible for the content of this page.

Watch Fed Will Signal to Markets a Move in March: State Street's Evans - Bloomberg

Live on Bloomberg TV

00:00Walk us through what has been certainly whipsaw when it comes to the markets 3 4 and the US seeing this continued bloodbath when it comes to equities. I'm just wondering are you seeing any signs that this drawdown we're seeing in January is coming to an end in any way. I think that's a little premature to to suggest that. I think we really need to get. I mean stating the obvious but we really need to get this Fed meeting out of the way that there's there's obviously a couple of things we're looking out for here. In all likelihood they will do absolutely nothing tangible this lot this evening. But tomorrow morning by the time I guess we we look both somebody get it that this is really a signaling meetings. They tend to signal in advance when they're going to move. They didn't signal an imminent move in December. So we shouldn't expect anything this time around. But they should be creating a sufficiently robust signal for the market today that they will move in March and in August. That is basically the where we are in terms of the Fed in and of itself. I am not entirely certain that that should have that much of a bearing on markets. That by itself has now been largely discounted and priced in. I think what's really hitting markets here is the combination of monetary tightening by itself probably not sufficient but also overlay that with the geopolitical risk coming out of Russia and Ukraine. And that has had quite a significant impact on sentiment more generally. And frankly given what we're seeing right now that doesn't seem an imminent sort of end to this because the geopolitical risks are playing out and we don't really know the extent of the hawkish bias of the Fed. So we really need to get this Fed meeting out of the way. Things might calm down a little bit. If the Fed indicates a gradual tightening process which is what is basically priced in but that still doesn't I guess alleviate the Haidi Lun the geopolitical risks which are just continuing clearly. Right. How do you square what has been quite hawkish pricing from the Fed with the policy easing that we're getting out of China which seems to be that they're leaning all in almost in terms of trying to avoid some sort of collapse in credit. Does that bode well at least for this part of the world. You would have thought so. If you look at equity markets in a bank right now in Asia right now you wouldn't think so. But actually you would think that the big change we've seen from last year to this year to last year in China was clearly regulatory crackdown common prosperity. This year already we have seen a focus on the aggregate growth story and that was reduced reiterated again from the Chinese prime minister yesterday. Monetary conditions have started to ease. We also expect fiscal conditions to ease as well. Fiscal spending. The impact it will have on infrastructure spending in China and the positive spillovers that that will have on the Asian market. So on the one hand markets in Asia will struggle in an environment of tighter global liquidity. But there is a little bit of ray of hope that China will continue with its credit growth cycle. Now that will not be as aggressive as previous cycles. But it should give a little bit more. We should put a little bit more emphasis on the region that it can ride out some of the tightening of policies that we're seeing elsewhere. So China does in a way it has a very important role here in steadying the ship. Besides the broad region markets are concerned. Yes I do. Before in fact the two sort of major themes that he touched on that I just want to get your thoughts on where those themes are in so suddenly six months from now. So pick an affiliation. Have we seen that peak growth. Do we get to push that back because of what China's been doing with monetary policy. So peak inflation frankly remains still a work in progress. So some of the indicators that we have we have proprietary indicators at State Street where we track high frequency inflation indicators. And there certainly was an indication towards the end of the year that we were hitting the peak in the annual sort of year on year rates. The only question mark against that is if we then assume that we get sort of average monthly rates of over the next six to 12 months those average average monthly rates will actually push us down back towards around 3 percent for us inflation for example which is perfectly acceptable as far as the Fed is concerned given its more flexible approach to inflation. That's assuming average monthly rates going forward. Now of course the base effect is much higher this year because the monkey wrench in 2021 were very very high. However what we've actually seen in the early part of January is actually stronger prices than we anticipated. There are a few sectors still that are posting very large price increases. Electronics being the real standout. And so as confident as we are that the trajectory of inflation is to head lower it may not be heading lower. At the same trajectory that we thought maybe even two or three weeks ago maybe there's still a bit of upside pressure there. I think we're close to the peak in terms of in terms of certain times of crisis and in terms of I mean that from an inflation perspective. But elsewhere in terms of you know six to eight months outlook in terms of growth that would really depend on the extent to which central banks actually take some policy. There is of course in some instances a reluctance to tighten policy in a number of markets. Still in the G10 space look at Japan look at the you guys are not going anywhere. And to the extent that they are not yet on a tightening cycle suggests there is still going to be ample liquidity out there. So growth will remain quite well supported this year. The hours of RTS I mean the RBA and what happened with the market reaction to that inflation for native Australia and it seems to suggest that markets are still sensitive to some of these inflation reads that set aside the Fed for example. I mean I have markets figured out other central banks at this point in time. I'll even throw in Singapore to that. Yeah well there's a there's a big divergence going on now. So it's all the G10 market is actually quite an interesting way to look at things right now because usually you would have a close correlation between markets in terms of their growth outlook and in terms of their policy outlook. And when you think about certain markets where we are expecting stronger growth for example the likes of I'm picking one year from from the G10 states like Norway for example. And yet the expectations on retakes out of Norway are actually quite quite muted compared with something like the UK. We're actually rate hikes are now getting rapidly priced in because of rising inflation. But actually the growth outlook in the UK is actually very very very very very very modest. So what that basically means is that there's a real divergence going on now between policy and growth in a lot of the G10 space. If you're getting this to to speed trap between a lot of these G10 central banks I mentioned the ECB and also the Bank of Japan. There are others as well that are ways behind the hiking cycle and those that are obviously front and centre such as the Fed Bank of Canada for example that are way ahead in terms of cyclical approach.

No schedule data available.

BTV Channel FinderWatch BTV in your area

Fed Will Signal to Markets a Move in March: State Street's Evans

Dwyfor Evans, head of APAC macro strategy at State Street Global Markets, discusses Fed policy, policy divergence from the PBOC and the implications for markets. He speaks on “Bloomberg Markets: China Open.” (Source: Bloomberg)

More From Bloomberg Markets
All episodes and clips