Will the ECB go for a heavier 50 basis-point hike and signal a possible pause, allowing President Christine Lagarde to echo Fed Chair Jerome Powell’s “credit tightening” excuse? The odds are for a smaller rise.
The Fed on Wednesday delivered what markets are convinced will be the last rate hike of the cycle. It signalled it may pause further increases, giving officials time to assess the fallout from the bank failures, wait on a political resolution to the U.S. debt ceiling, and monitor inflation.
Another bank soon reported trouble. PacWest Bancorp fell nearly 60% after announcing it is exploring strategic options, including a potential sale or capital raise. A liquidity boost it announced in March failed to inspire confidence in its ailing share price.
Those worries left Asian markets pricing in not just a possible peak in U.S. rates but even a fall. Fed Funds futures imply a 52% chance of a rate cut in July.
The focus will move back to the tech sector later in post-market hours in the United States when the world’s most valuable company, Apple Inc, may report a more than 4% drop in revenue, its second straight quarterly decline, weighed down by consumers shunning non-essential purchases such as iPhones and Mac computers and slowing growth at its services business.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/6F7S4UU7QBP3RJO2TF6W5XOQR4.jpg "Next up ECB: Will it be a hawkish 25 or dovish 50? 42")
