The Swiss National Bank surprised markets by cutting its overnight rate 25 basis-points to 1.50% at today’s policy meeting. The implied probability of a cut today was only 37%, with most traders penciling in a 88% probability of the SNB’s first cut happening at the June 20th meeting. Today’s cut is the first by a major economy since the post-covid inflation surge.
USD/CHF is +1.23%, EUR/CHF is +0.82% and GBPCHF is +0.54% in trading today. CHF is the biggest mover today, lower against all G10 and major currencies.
The FOMC left the overnight target rate unchanged in its policy decision announced yesterday. True to the Fed’s unwavering focus on targeting 2% long-term inflation, yesterday’s policy statement differed from the January 31st rate announcement by only 6 words (which may be a record). Fed Chairman Powell did confirm the Fed’s view that policy easing will be appropriate later this year, and markets continue to imply three 25bps cuts by December. The FOMC’s next rate decision is scheduled for May 1st.
The Bank of Mexico is expected to cut its overnight rate by 25 basis-points today to 11.00% from the current 11.25%.
Gold reached a fresh all-time high today at $2,222.39/oz, +0.62% today and +6.55% YTD.
U.S. Weekly Jobless Claims were 210k for the week ending March 16th, below the 213k estimate.
Equities are building on yesterday’s gains with the three major indexes in the green today. The S&P500 is leading with a 0.89% gain, followed closely by the Nasdaq’s 0.83% gain.
