the weekly market report

This week we are likely to see the FOMC announce another rate rise, but potentially trimmed down to just 25 basis points (Bp). The global banking uncertainty has caused central banks around the world to rethink the timing of their terminal rates. The CME’s FEDWATCH is now pricing in FED cuts as early as the June meeting. When the case for cuts really does begin to gather momentum we can expect the USD to continue is decent. Currently, the Greenback is treading water in the mid range. DXY support is seen around the 103 zone. If the Fed does deliver a 25bp rise and indicates an earlier terminal rate then this is likely to be tested this week. A break and close below 103 will pull the 100 level into focus.

Credit Suisse, a Swiss multinational investment bank and financial services company, has recently faced a tumultuous period resulting in a significant decline in its financial performance ultimately leading to it's collapse Amongst the latest setbacks, the bank has been struggling with a series of high-profile scandals that have led to a decline in customer trust and severe regulatory scrutiny. One of the significant events that led to the fall of Credit Suisse was the revelation of its connection with the Archegos Capital Management scandal, which resulted in a loss of $5.5 billion. The bank's failure to manage the risk associated with Archegos Capital Management's trades led to a significant decline in its reputation, and the bank's top executives were held accountable for the fiasco. Additionally, Credit Suisse has also faced internal governance issues, with reports of harassment and bullying leading to the departure of several senior executives. The bank's board of directors has also been criticized for its ineffective oversight of the management's actions. This has had some major ripple effects across the globe with five central banks engaging with one another to stop the bleeding. We haven't heard the last of this situation and will have to be prepared for what comes next.

The stubbornly high UK inflation will likely lead to another 25 basis point rise when the UK Monetary Policy committee meets on Thursday. However, this is by far a done deal. The global banking turmoil is calling this hike into question by some analysts. There is now a 51% chance that the MPC will keep rates unchanged. However, as the with the MPC last week, the Central bank is mindful not to cause panic but refraining so we believe the 25 bp will be delivered with a 7 to 2 vote. Sterling was little changed after the UK budget last week and is currently trading as one of the strongest currencies and appears to be not too affected by the fallout of the banking sector.

The US job market has shown significant resilience in recent months, with the unemployment rate continuing to decline and job creation exceeding expectations. The gains were widespread across sectors, including leisure and hospitality, education, healthcare, and professional and business services. While there are concerns about labor shortages and wage pressures, the robust job market is a positive sign for the US econom although equally adding to the problem of inflation. This week's IJC data is expected to come in at a sustained level of around 200k. Should the data show a large jump from this number, it could cause a shockwave in the stocks but if it comes in as expected or slightly lower, we don't expect much in terms of a strike.