S&P 500 FUTURES, YIELDS LICK FED INFLICTED WOUNDS AHEAD OF MORE CENTRAL BANK ANNOUNCEMENTS

On Wednesday, the Fed confirmed the market’s expectations of announcing a 0.25% rate hike but failed to convince the policy hawks. The reason could be linked to the statements saying, “Some additional policy firming may be appropriate,” instead of previous remarks like “Ongoing increases in the target range will be appropriate.”

It should be noted that Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen’s comments triggered the market’s pessimism as Fed’s Powell said that officials do not see rate cuts for this year, which in turn allowed breathing space to the greenback bears in the last.

On the other hand, US Treasury Secretary Janet Yellen ruled out considering “blanket insurance” for bank deposits. Recently, Bloomberg also came out with the news suggesting that the Federal Deposit Insurance Corporation (FDIC) is said to delay the bid deadline for a Silicon Valley private bank.

Elsewhere, Citibank CEO Jane Fraser tries to placate market fears while saying, "This is not a credit crisis. This is a situation where it's a few banks," per Bloomberg. It should be noted that multiple central bank officials have also tried their hands to rule out fears of the 2008 crisis earlier but have failed so far. However, their swift reaction to the fallouts of the Silicon Valley Bank (SVB), Signature Bank and Credit Suisse gains applause and push back the odds of the market’s collapse.

Looking ahead, strong inflation data from the UK may allow the BoE to keep its hawkish bias and announce a 0.25% rate hike while the SNB is up for 50 basis points (bps) of rate lift despite the banking turmoil.

Although the hawkish central bank actions may probe the optimists for a bit, any negative surprises, either in the form of dovish rate increases or no rate lifts at all, could bolster the market’s risk-on mood and propel the yields.