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11 Nov 2014
Trading the BoE inflation report - TDS
FXStreet (Guatemala) - Analysts at TD Securities explained that the big question for Governor Carney’s press conference is if he says something to the effect of, “we can afford to maintain the current degree of monetary stimulus for a longer period than previously thought”?
Key Quotes:
“While three other MPC members have said it already, it would sound much more dovish coming from Carney, particularly at a QIR press conference where he tends to talk more to the consensus view, and particularly if it made it into the opening statement”.
“Although it wouldn’t necessarily mean that rate hikes are off the table until beyond the Q3 2015 timing that markets are currently pricing in, we think that we’d still see rate hikes pushed back further from here”.
“We think that the BoE wants to leave with the message that if the environment were to improve significantly in the coming months, then it would be fine to hike, but that its base case is that the environment will not clear up that fast, so the hiking base case gets pushed back for now”.
“For medium-term trades, we like paying 5y5y forwards, but want to wait for 168bps to enter 2s10s gilt flatteners”.
Key Quotes:
“While three other MPC members have said it already, it would sound much more dovish coming from Carney, particularly at a QIR press conference where he tends to talk more to the consensus view, and particularly if it made it into the opening statement”.
“Although it wouldn’t necessarily mean that rate hikes are off the table until beyond the Q3 2015 timing that markets are currently pricing in, we think that we’d still see rate hikes pushed back further from here”.
“We think that the BoE wants to leave with the message that if the environment were to improve significantly in the coming months, then it would be fine to hike, but that its base case is that the environment will not clear up that fast, so the hiking base case gets pushed back for now”.
“For medium-term trades, we like paying 5y5y forwards, but want to wait for 168bps to enter 2s10s gilt flatteners”.