END OF DAY REPORT JUNE 15th
HIGHLIGHTS- EQUITIES, FUTURES & OPTIONS
The Fed and SEC are investigating Goldman Sachs's (GS) role in buying Silicon Valley Bank’s securities portfolio while it was working on its doomed capital raise before its failure, according to WSJ citing sources
ECB policymakers began debate on "evening out" the interest rate corridor between its three administered rates; discarded move on corridor this week and see no decision in July, but seen gaining relevance later this year - Reuters sources Comes amid banks needing to now compete for cash/funding, and the need to borrow it from the ECB. Staff presented the option of making the spreads between the three rates equal as they were until 2014.
WSJ's Timiraos tweets, citing Fed watcher Tim Duy, "Powell's Freudian "skip" suggests a July rate rise is the base case, even though (as always) the economy can intervene"
Manchester United negotiating the granting of exclusivity to Qatar's Sheikh Jassim in USD 6bln-plus sale negotiations, according to Reuters sources
ECB set for a "tough debate" next month over whether a possible September rate hike is needed, according to Bloomberg sources
As expected, the ECB delivered another 25bps hike to the Deposit Rate, taking it to 3.5%. The decision to raise rates was once again premised on the judgement that inflation "is projected to remain too high for too long". Going forward, policy decisions will continue to follow a data-dependent approach and on a meeting-by-meeting basis. Perhaps the main takeaway from the initial announcement came from the accompanying macro projections which saw upgrades to headline and core inflation forecasts for 2023 through 2025 with the core 2025 print expected above-target at 2.3%. From a growth perspective, 2023 and 2024 forecasts were revised lower by 10bps. Elsewhere, the GC confirmed that it will discontinue the reinvestments under the asset purchase programme as of July 2023. At the follow-up press conference, when questioned on whether the GC expects to keep raising rates, Lagarde replied that there was still "more ground to cover" and the ECB is not done on rate hikes. Note, Lagarde once again refused to comment on where she saw the terminal rate. In terms of the unanimity of today's decision, Lagarde said the discussion was harmonious and there was a broad consensus. Overall, the decision by the ECB and subsequent commentary was very much as expected, whilst the main takeaway from the release came from the sticky outlook to core inflation which is indicative of further action by the Bank. As such, pricing for Q4 picked up a touch with terminal now seen at around 3.78% vs. 3.75% pre-release. That said, despite Lagarde making it clear that a July hike is on the cards, the odds of such an outcome is only around 65% which is largely unchanged from pricing ahead of the decision.