Not the FED!
Once again, the Federal Reserve has came out with more hawkish outlook on monetary policy. Details were released regarding their balance sheet run-off in their latest meeting minutes. They are targeting a run-off of $95 billion per month, likely starting in May. However, this did not go through an official vote and is simply "generally agreed" that the run-off will have $35 billion in mortgage-backed securities and $60 billion in Treasurys. This is expected to be phased over three months.
One may wonder of this impact on financial markets, as banks and financial institutions have over $1.8T in the overnight reverse repo market, which shows the amount of excess cash in the market.
Elon's next mission?
Elon released his 9.2% stake in Twitter before the opening bell on 4th April 2022. This news sent the stock surging over 27% on the day. A stock ownership of over 5% usually signals an activist investor, which was confirmed when Elon joined the board of directors the next day.
Elon has previously shown his displeasure at current media outlets, citing that current media outlets are untrustworthy, even citing that Twitter is "failing to adhere to free speech principles fundamentally undermines democracy".
Inflation: Enemy number 1
Early in the trading week, key Fed members such as Fed Governor, Lael Brainard and San Francisco Fed President Mary Daly, had their speeches regarding inflation. They emphasized the Federal Reserve's commitment to fight inflation using higher interest rates.
Furthermore, the meeting minutes from the previous Fed meeting echoed what they iterated, with Fed members believing that a 50 basis point hike in the near future is necessary to curb inflation.
The market tumbled on this news, as higher interest rates could hamper stock valuations. As for bonds, only the 5-30 and the 10-30 bonds remain inverted.
Jobless? Maybe not
On 7th April, initial jobless claims totaled 166,000 for last week, the lowest ever since late 1968.
This data release only heightens the strength of the current labor market, with lesser and lesser people reporting jobless.
One thing this can affect will be how the Federal Reserve views the current labor market, and how strong it currently is. This heightened strength may only spur them to further increase rates to slow down inflation, but that's all speculation.
More funding for Start-ups?
Morgan Stanley released details on their plans to start targeting the ultra rich, developing products to target family offices with over 10 billion of assets under management.
Family offices like this have exploded in numbers in the past decade. While in their search to make even more money, family offices have become an extremely versatile investment vehicle, making bets on financial markets, investing in private equity, and even investing into start-up firms.
Morgan Stanley is actively work on matchmaking services where start-up firms can directly receive funds from the bank, using capital from family offices and other ultra-high net worth clients.
Upcoming events
Monday, 11 April
United Kingdom - GDP
United Kingdom - Manufacturing Production (February)
Tuesday, 12 April
United Kingdom - Average Earnings Index (February)
United States - CPI (March)
United States - OPEC Monthly Report
United States - Federal Budget Balance (March)
China - Exports/Imports (March)
Wednesday, 13 April
United Kingdom - CPI (March)
United States - PPI (March)
United States - Crude Oil Inventories
Thursday, 14 April
Euro Zone - ECB Interest Rate Decision (April)
United States - Initial Jobless Claims
United States - Retail Sales
Friday, 15 April
United States / United Kingdom / Singapore - Good Friday
Singapore - URA Property Index (1st Quarter)