The Fed, the BOE and the BOJ all meet this week, while Amazon, Apple and Microsoft report Q2 earnings and at the end of the week the US will release its latest labour market report. Markets have failed to so far give off a summer vibe: there have been sharp sell offs and big negative reactions to earnings data, added to that political risks have taken centre stage.
If the Fed wanted to avoid being accused of political bias, then they may cut rates at this week’s meeting. However, the market is not expecting a rate cut with only a 4.5% chance of a cut currently priced in. Thus, we do not think that they will rock the boat this week. Instead, they will bat away suggestions of political bias by saying that they remain data dependent. Will the BOE cut rates? The Bank of England also meet this week.