Three Central Bankers walk into a room…

Three Central Bankers walk into a room… Over the last 24 hours we have seen policy announcements from the big three central banks – the Fed, Bank of England (BoE), and European Central Bank (ECB). All three central banks are dealing with unprecedented levels of inflation but announced drastically different policy actions. The Fed followed through on a widely expected acceleration to its taper while the BoE surprised markets by increasing its benchmark rate by basis points to 0.25% at their policy meeting earlier today. The dove in the room, the ECB, suggested this morning that they would not hike rates a single time in 2022, and would instead opt to fill the proverbial punchbowl to the brim with an additional $30B in purchases to offset any economic impact from omicron. Short-dated swap rates and Treasury yields were pulled lower by the ECB’s surprisingly dovish stance- 5-year rates declining a full 8 bps while the 10-year Treasury yield flirted with a 1.40% level, ultimately closing at 1.41%.

Tech stocks continue to wobble. The Nasdaq Composite fell 2.47% in its worst session since September, delaying (perhaps temporarily) Apple’s coronation as the first U.S. company with a $3T market capitalization. The main culprits were names like Adobe which fell nearly 10% on a change to its revenue guidance, and a bevy of semiconductor  names. Tomorrow promises to be just as choppy- several indices make their quarterly rebalances effective after market close, and equity options and futures expire in an event commonly referred to as a “triple witching”.