- The Fed was more hawkish than anticipated and the Fed meeting most likely marked the first step of the Fed taking the foot off the gas.
- Fed is now signalling two rate hikes by end-2023 and that the FOMC members will continue discussing tapering at upcoming meetings.
- We have changed our Fed call now expecting the Fed to start actual tapering in Q4 21 and hike for the first time in H2 2022 (from January 2022 and Q1 23, respectively).
- FX: We think the message from FOMC and the likely path for US monetary policy support our call for a lower EUR/USD. We still forecast 1.15 in 12M.
- Fixed Income: Fed message adds more upside to UST yields. We believe that the risk is still tilted to the upside over the coming quarter and continue to see 10Y UST at 2.0% year-end. However, we should probably see an actual improvement in the labour market and a more firm discussion on tapering before we see a move to the 1.75-2.00% range
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.