Headlines:Sterling tumbles as BOE paints dire outlook on UK economyBOE raises bank rate by 25 bps from 0.75% to 1.00%, as expectedBOE’s Bailey: Risks to inflation are skewed to the upsideOPEC+ reportedly agrees to stick with existing oil output policyOPEC+ JMMC reportedly recommends sticking to existing oil output policyECB’s Lane: Unlikely to revert back to pre-pandemic inflation trendECB’s Lane: Exact timing of rate hike is not the most important issueECB’s Panetta: It would be incautious to act on rates before seeing Q2 dataUK April final services PMI 58.9 vs 58.3 prelimGermany March factory orders -4.7% vs -1.1% m/m expectedUS April Challenger layoffs 24.29k vs 21.39k priorSwitzerland April CPI +2.5% vs +2.5% y/y expectedMarkets:USD leads, GBP lags on the dayEuropean equities higher; S&P 500 futures down 0.6%US 10-year yields up 2.9 bps to 2.944%Gold up 0.9% to $1,897.50WTI up 0.8% to $107.10bitcoin down 0.9% to $39,461The post-FOMC moves yesterday are retracing back slightly as the dollar firmed, bond yields crept higher and US futures are marked lower in European morning trade. But the pound is the big mover as it crumbled amid a dovish rate hike by the BOE, with the central bank painting a rather bleak picture of the UK economy moving forward.Stagflation risks are what stands out as policymakers predict 10% inflation this year with the economy contracting at the end of the year and grinding to a halt in the early stages of next year.That is enough to drag the pound to fresh lows since July 2020 as cable tumbled from 1.2540 to below 1.2400 currently.Meanwhile, there is still some debate to the peak hawkishness message from the Fed yesterday as markets scaled back on the post-FOMC moves. EUR/USD moved down from 1.0600 to 1.0550 while USD/JPY jumped up from 129.30 to near 130.00 again currently.AUD/USD also gave up gains from around 0.7240 in a fall to 0.7190 at the moment.This comes as bond yields are staying higher with 10-year Treasury yields still lingering just below the key 3% mark.Elsewhere, stocks are also looking more guarded with US futures holding lower once again as yesterday’s late spark may yet prove to be fleeting.

But when inflation falls, it will fall rapidlyUK inflation is well above target in the near-term, but will subsequently fall below targetNo decision made on whether to have active sales of government bonds held by the BOEBOE forecasts do not meet technical definition of a recession but it is a very sharp slowdownOn the dire outlook to the economy, he is mainly playing with semantics. You don’t forecast zero growth without warning of recession risks that may befall the economy, not least in this environment. The pound is continuing to fail to find much comfort as the technical break in cable now starts to threaten the 1.2400 level.

Well, they are the first major investment bank to be calling for parity in EUR/USD. On the revision, the firm argues that:“The euro has already faced more downward pressure than we expected, but we find it hard to see a silver lining for the single currency at this stage. We therefore change our forecasts to reflect a more bearish view, and see euro-dollar moving to parity in the year ahead.“

That was quick but not unexpected whatsoever. This means the bloc will stick to increasing oil output by 432k bpd in June. Will this be the shortest OPEC+ ministerial meeting on record? Perhaps but it will be close. In any case, carry on as you will.

Prior 21.39kUS-based employers announced 24,286 cuts in April, a 14% increase from March. Of note, it is the first time this year job cuts were higher than the corresponding month a year earlier (April 2021 was 22,913). That said, so far this year, employers announced plans to cut 79,982 job cuts – the lowest recorded January to April total on survey record. Challenger notes that:“Job cut plans appear to be on the rise, particularly as companies assess market conditions, inflation risks, and capital spending. Despite this, job openings are still at record highs. Workers who are being cut will have lots of opportunities and will likely land quickly.“

Headlines:FOMC day is finally upon usEU’s von der Leyen: We will phase out Russian supply of crude oil within six monthsLatest EU sanctions will also target Russia’s top bankSNB’s Maechler: A strong franc helps to guard against inflationUS MBA mortgage applications w.e. 29 April +2.5% vs -8.3% priorEurozone March retail sales -0.4% vs -0.1% m/m expectedEurozone April final services PMI 57.7 vs 57.7 prelimGermany March trade balance €3.2 billion vs €9.8 billion expectedUK March mortgage approvals 70.69k vs 70.78k expectedMarkets:AUD leads, CHF lags on teh dayEuropean equities lower; S&P 500 futures up 0.4%US 10-year yields up 0.8 bps to 2.965%Gold up 0.1% to $1,868.82WTI crude up 4.4% to $106.92Bitcoin up 3.3% to $39,017It was very much a placeholder session as we await the FOMC meeting later today.There were light changes among major currencies, though the dollar is resting a touch softer for the time being. That said, the moves are relatively light all things considered.EUR/USD stuck in a narrow range around 1.0510-20 levels while USD/JPY did see a light retreat from 130.05 to 129.90. Commodity currencies are faring better as US futures inched up and the loonie benefited from stronger oil prices.AUD/USD is up 0.5% to 0.7130 from around 0.7110 earlier in the day. Meanwhile, USD/CAD inched lower from 1.2830 to 1.2805 as oil rallied after the EU proposed a phased embargo of Russian crude oil supply. WTI crude moved up over 4% to near $107 currently.The bond market remains tentative as all eyes are on the Fed while equities are having a mixed showing with European indices holding slightly lower while US futures are up a touch on the day.The Fed holds all the cards for what comes next, so let’s see what Powell & co. has to offer later in the day. May the 4th be with you~

Prior -8.3% Market index 351.8 vs 343.1 prior Purchase index 244.4 vs 234.7 prior Refinancing index 932.3 vs 930.7 prior 30-year mortgage rate 5.36% vs 5.37% prior Mortgage activity in the US saw a bit of a rise in the past week but it doesn’t take away from the sharp declining trend amid the surge in rates since the turn of the year. The 30-year mortgage rate is seen moderating as yields also stall somewhat ahead of the Fed but alongside higher house prices in general, this still sends some mixed signals about the housing market. US dollar

Thinks that inflation will come back down but have to be vigilantDeterioration in consumer climate could weigh on economyA strong franc helps against inflation, helps to reduce the price of importsDespite rising market interest rates, we remain in a world of very accommodative financial conditionsIt’s not exactly a shift in thinking in the SNB. Maechler is just mainly alluding to the fact that the franc has remained ’strong‘ and inadvertently that is helping the Swiss economy guard against inflation pressures.

There’s only one notable expiry on the board for today, as highlighted in bold.But even then, the one for EUR/USD at 1.0600 should not be of much significance in all honesty. It is all about the Fed today and price action in the lead up to the main event is likely to stay more subdued overall. As such, the expiry should roll off without a hitch and without much interest considering the nature of today’s market.For more information on how to use this data, you may refer to this post here.

Prior +0.3%; revised to +0.4%
Retail sales +0.8% vs +1.4% y/y expected
Prior +5.0%; revised to +5.2%

Euro area retail sales fell by more than expected in March as price pressures start to bite at consumption activity in the region. Looking at the details, the volume of retail trade decreased by 2.9% on the month for
automotive fuels, and by 1.2% for non-food products, while it increased by 0.8% for food, drinks and tobacco.