 Hello and welcome to the rundown for this week ahead and as per usual I'm going to summarize some of the key things You need to be aware of namely, we're going to talk about the upcoming FOMC meeting We're going to get Wednesday and then the delayed Bank of England interest rate meeting as well coming this week We'll also touch on the BOJ. They've also got a policy meeting and we've also got Eurozone flash PMIs coming out on Friday But let's just talk about what's happened today for a lot of people in the UK I'm sure you've been Watching the Queen's funeral kind of bittersweet, but what an amazing woman and yeah now on to the to the king Long may he reign but let's talk about what's happened in markets this week So far because the US have been in as per normal and as you can see here I've got a chart of the S&P 500 of which has really picked up in the second half of the trading day No real one single catalyst, but you can see here the NASDAQ 100 Also trading up around a good part of 1% and it does come in the context of US indices Posting their worst week since mid-June. So a little bit of a natural bounce albeit some people still much more of a bearish disposition going forward The 10-year Treasury yield briefly rose above 3.5%. You can see on this chart here for the first time since 2011 ahead of what is of course the expected FOMC interest rate hike We're likely to get of 75 basis points which we'll talk about in a moment the two-year Treasury note rose to a 15-year high Just short of 4% As I just mentioned the probability at the moment is around 82% for a 75 basis point rate hike from the Fed and We still have a marginal outside bet of 100 basis points priced in at around 18% For the time being now the reason why some of that has moved More recently on the potential for a hundred basis point rate hike Of course comes on the back of that hot inflation print that we saw more recently Hence the reason why there are some of those more minority bets looking for that much larger movement While geopolitical backdrop the Chinese slowdown kind of story the potential for energy rationing in Europe strong dollar Fragile looking domestic equity and housing markets. They all argue for a more moderate rate Of policy tightening in the common months if inflation momentum continues like what we saw with the surprise print last time out It's probably going to be the case that the Fed will continue to press on and around the 75 basis point clips and Expectations from some analysts are that we'd like to see another 75 in November possibly another 50 then in December Of course the bank will be releasing their latest dot-plot projections and one of those of course that we'll look out for is the end-of-year Terminal rate for Fed funds and we are expecting that to go up to around the four to a four and a quarter percent Range that's what goldman's analysts are looking for they're backing a 75 call for for the Fed for this week And if that was to materialize of course It's continued to tighten conditions and that being quite a key crucial factor Which could potentially weigh further on equity prices going further forward here is that kind of bingo type card that our friends at ING put together and It outlines the four main kind of policy areas split in two really one side on the inflation growth outlook and in the second side on the actual policy tools in use that being interest rates and of course Quantitative tightening and then here you've got the current existing phrases used for each one of those sections And then a scale from top being most dovish to down being very hawkish and the various different outcomes And then on the right-hand side Subsequent reactions we could see in the rates market and also in the euro dollar currency pair so Just taking a quick look at their base case As this is I'd say is probably one shared on the street And that is for interest rates of a 75 basis point hike the dot plot and Comments point to rates heading towards that four and a quarter percent end of 2022 year range More hawkish reactions are something that could fire up the dollar yields and certainly way on equities could be the idea of then hiking 100 again early around one fifth of the market expecting that from a market pricing perspective The dot plot and comments could indicate more like a four and a half percent Terminal rate at the end of the year or even higher very hawkish 125 basis point hike and the Fed signals clear intent to crush inflation I would say that is highly improbable And if such would cause a very distinct and sharp market reaction But I wouldn't be expecting that of instead of those ultra hawkish type Expectations I'd probably prefer to pivot more towards the 75 and the hundred as potential outcomes here Then of course the next meeting we've got this week is the Bank of England This is going to be particularly interesting as well The majority of the 47 economists most recently surveyed by Bloomberg are expecting the BOE to hike interest rates for the seventh consecutive meeting and they are expected to do so by a half a percentage point So 0.5% Investors on Friday were pricing in just over a 50% chance of a three-quarter point increase reining in those bets from a peak of 80% several times in the last few weeks And of course we've had list trust come out with energy price cap And that has had a bit of an impact on what we are expecting with that energy intervention on behalf of the government To prevent then that wheat winter spike in prices So inflation is going to analysts expected to peak at 10.5% in October. Remember it has come Back a little bit under that 10 marker Surprisingly in the recent weeks, but is expected to move north again But not as to where the bank had previously forecast, which was 13.3% in October So that in itself some expect then to rein in the need for such aggressiveness Certainly if you have a bearish disposition on the monetary policy committee If though that the bank does decide to go 75 basis points a move of that margin would be the biggest rate hike from the Bank of England Since 1989 as you can see here That would have been going through this period here when we saw a distinct pickup in Interest rates at that point in time or inflation. I should say now a couple other things to be aware of Here you can see the big Divergence between that of where UK rates reside at the moment and to where inflation is at this present time at 9.9% so this is one of the biggest gaps between those two metrics of all of the Western developed central banks out there and hence the Ration out why the Bank of England might need to put their foot to the floor and really go for a more aggressive hike here as I've said although they've hiked multiple times They've always done so by much smaller increments than what we've seen from the lights of the Fed or the Bank of Canada and the like and then Just taking a quick look at the monetary policy committee One thing to be aware of here is that Michael Saunders who was one of the most hawkish members of the panel He has now left. He stepped down last month and he's been replaced here by a Swarti Dengra and For a bit of background. We don't know too much about her at the moment But she comes from as an associate professor at the London School of Economics LSE so looking out be interested to see what her voting pattern is But we are expecting according to most analysts to sit rather center ground at this point in time But as you can see here all of them leaning on the side of ultimately hiking rates the question being how aggressive do they go? The other things to be aware of a day after the Bank of England rate decision So at the end of the week on Friday the chance of the exchequer quasi-curtain Is due to give a statement to Parliament setting out more detail on the energy proposals From the government and also confirming plans to reverse a recent rise in payroll Taxes the costs at a tax pay in terms of extra government borrowing is expected to top 100 Billion sterling as such the bank could choose to delay the commencement of selling of guilt Recognizing the additional guilt supply coming down the tracks and what that means is away from the blunt instrument of just moving interest rates Could they hold back at this point in time of the active selling of guilt's which would be akin to quantitative tightening? So what you could do is hike rates But if you don't do quantitative tightening you only kind of giving one tightening signal Rather than then two-fold which could be too much for the market to handle at this point in time and a step too far Perhaps if they decide to go big and 75 hike If indeed inflation is now not going to peak as high as we previously thought and with the looming recession Then demand expected to decline as we go further forward in time The other things that are happening is that of the Bank of Japan Much less exciting They're expected to make its policy decision on Thursday and most economists expect the BOJ to basically stick to the plan Which is holding 10 year bond yields near zero as it attempts to stoke more durable inflation What otherwise has been particularly tepid for the last few decades. So Not too exciting for that one But one thing we will be looking out for on Friday is as you can see here We get a whole batch of the various different UK European and US flash Manufacturing PMI and service PMI data points. These would be quite important in the eurozone It will get the first look at economic activity then in September with PMIs and after two months below 50 Expectations are there's going to be another one to follow in contractually territory as manufacturing production cuts due to high energy Prices and the end of the tourist season are set to impact business activity That's pretty much it Obviously lots of other things going on But really they're the main events to look out for so the federal Wednesday the Bank of England on Thursday You're going to be crucial market Events to monitor. All right, take care Don't forget to like and subscribe to the channel if you haven't already done so and I'll see you for the next video All right, take care