Aurelia Butler

Investing.com — The Federal Reserve is expected to opt for the “safest” path and meet the market expectations of a quarter-point hike later this week as the risk of a pause causing inflation to reaccelerate is too much too bear just as the current turmoil in banking system sparks uncertainty and the lingering ghosts of the central bank’s previous transitory inflation call that dented its credibility continue to linger.          “To go with the market pricing of a hike by 25 basis points is the safest way for the Fed,” Zhiwei Ren, Managing Director and Portfolio Manager at Penn Mutual Asset Management told Investing.com’s Yasin Ebrahim in a recent Interview. “I don’t think the Fed can have a strong conviction in this market … What do you do when you don’t have a strong conviction … You go with the market expectation,” Ren added. About 80% of traders expect the Fed to hike rates by 0.25% on Wednesday.  The Fed, however, would likely prefer to wait, Zhiwei says, but it doesn’t have the luxury nor the option as it is still on a mission to restore credibility – a central bank’s most valuable asset.Much of that credibility took a hit following the Fed’s unwillingness to ditch its transitory inflation call. Any action that could cause a reacceleration in inflation, particularly when price pressures remain sticky, would be too much too bear.“If there’s a pause or even cut on rates, and the economy were to reaccelerate, and the CPI (consumer price index) goes up to six or seven percent again, then the Fed is going to face a lot of backlash from the politicians and there’s a risk of credibility,” Ren added. “They made the mistake of calling inflation transitory, so they have wasted some of the political capital,” Ren added “I don’t know if they still have more have more political capital to spend at this point.”Other market participants, however, believe the ongoing turmoil in banks – following the collapse of Silicon Valley Bank, Signature Bank (NASDAQ:SBNY), and Credit Suisse – provides enough reason for the Fed to pause rate hikes, arguing that it won’t derail the Fed’s inflation fight.“We expect the FOMC to pause at its March meeting this week because of stress in the banking system,” Goldman Sachs said.A pause in the fight against inflation should “not be such a problem,” Goldman Sachs adds, as bringing inflation back to 2% is a medium-term goal … and “the FOMC can get back on track quickly if appropriate, and the banking stress could have disinflationary effects.”Beyond the rate decision, the Fed’s summary of economic projections, or “dot plots,” about future economic growth, inflation, unemployment, and rate hikes will come into focus.The Fed’s most recent projections in December pointed to the peak level of rates reaching a 5% to 5.25% range, or 5.1% at the midpoint, suggesting two further rate hikes.The current banking turmoil, however, means that the Fed’s rate hike path is far less certain than before the stresses in the banking sector started to emerge. Earlier this month Powell had teed up the idea of a larger rate hike in March.”The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said earlier this month in prepared remarks for a hearing before the Senate Banking Committee.Beyond the monetary policy decision and dot plots, Powell’s messaging is expected to serve as an important gauge of whether the bumps in banking sector have eased the Fed’s conviction to fight inflation with higher rates.“The hawkish or dovish market read may come down to whether Powell focuses more on financial or price stability in the press conference,” Citi said in a note, forecasting the Fed to not only hike by a quarter-point but also upgrade its rate-hike path by another 25-basis-points.   More

(Reuters) – A look at the day ahead in Asian markets from Stephen Culp.Global market skittishness over whether contagion is afoot within the banking sector appears to be waning.In fact, if European and U.S. markets on Monday are a prologue to Asian markets on Tuesday, investors can look forward to a rebound.On Monday, the Hang Seng tumbled 2.7% to a three-month low and the Nikkei 225 dropped 1.4%, but the risk-off fog began to lift as the earth rotated around to Europe.European shares reversed an early sell-off to close up 1% as bank shares rallied, and all three U.S. stock indexes ended higher, led by a 1.2% jump in the blue-chip Dow.Safe-haven assets – gold and the greenback – were both down about 0.5% at the closing bell.The S&P Banking index ended the session up 0.6%, but even with Monday’s advance, the index has plunged 21.3% this month.Last week’s banking bloodbath culminated with the UBS buyout of Credit Suisse after financial heavy hitters in the U.S. threw a $30 billion lifeline to First Republic Bank (NYSE:FRC).And on Monday, the Federal Deposit Insurance Corporation orchestrated an agreement for a subsidiary of New York Community Bancorp (NYSE:NYCB) to buy deposits and loans from the freshly shuttered Signature Bank (NASDAQ:SBNY).All of which appears to have calmed fears and brought stability to the market, for now.As central banks around the world juggle financial sector liquidity needs with their ongoing effort to curb inflation while avoiding recession, with the Federal Reserve due to convene for its two-day monetary policy meeting on Tuesday.Market expectations regarding the size of the Fed’s next rate hike to be announced on Wednesday – and indeed whether it will raise interest rates at all – are in constant flux.At last glance, financial markets have priced in a 73.1% likelihood of a 25 basis point increase to the Fed funds target rate and a 26.9% probability of no hike at all, according to CME’s FedWatch tool.European Central Bank president Christine Lagarde insisted on Monday that the ECB has the tools to contend with financial market turbulence while fighting inflation, just days after announcing a hawkish a 50 basis point policy rate hike.Here are a few things to watch for on Tuesday:- Chinese President Xi Jinping and Russian President Vladimir Putin are slated to engage in formal talks regarding Beijing’s proposals for a war resolution- South Korea releases its February PPI report- The Federal Reserve convenes for its two-day monetary policy meeting More

Good morning. Today we start with Chinese president Xi Jinping’s meeting with his Russian counterpart Vladimir Putin in Moscow, where the two leaders promoted China’s peace plan to end the war in Ukraine.Putin welcomed the 12-point plan, which he praised for following “principles of fairness”. Xi returned the warm welcome, endorsing Putin’s “strong leadership” — and both called each other a “dear friend”. Since Russia’s full-scale invasion of Ukraine last year, China has provided an economic lifeline to Russia that has eased the pain from western sanctions. Xi’s peace plan, meanwhile, largely repeats the talking points the Kremlin has used throughout the war, without condemning Putin’s invasion or calling on him to withdraw troops. The US, which is Ukraine’s most important ally, has said China’s peace plan amounts to “the ratification of Russian conquest” by calling for a ceasefire that would solidify Russian occupation of Ukrainian territory.Kyiv, however, has avoided criticising the plan ahead of an expected call between Xi and Ukraine president Volodymyr Zelenskyy, which would mark the first time they have spoken since the war began in February last year.Here’s what else I’m keeping tabs on today:German official visits Taiwan: Bettina Stark-Watzinger, federal minister of education and research, is due to arrive in Taipei as the first German federal minister to visit Taiwan in 26 years. Nato annual report: Nato secretary-general Jens Stoltenberg presents the defence alliance’s report at its headquarters in Brussels.Federal Reserve meeting: The outlook for the Fed is no longer so clear following the collapse of Silicon Valley Bank. Investors will be closely watching policymakers’ two-day meeting, which begins today.Thank you for your feedback on FirstFT’s redesign. Please send us your thoughts on today’s update to [email protected] more top stories 1. US bank chief executives are searching for a new plan for First Republic after a $30bn lifeline failed to stop a sharp sell-off in the lender’s shares. Shares of First Republic, which have fallen by almost 90 per cent this month, were down by 47 per cent at the close of the US markets on Monday. Here’s what else to know about the US bank chaos: Federal regulators have extended the bid deadline for the failed Silicon Valley Bank.Shares of New York Community Bank jumped 30 per cent after one of its subsidiaries agreed to buy most of Signature Bank, the failed crypto-focused lender. 2. Credit Suisse bondholders were in uproar yesterday and the European Central Bank raised concerns after the rescue deal by rival UBS wiped out $17bn of the failed Swiss bank’s bonds. “In my eyes, this is against the law,” said a fund manager at Aquila Asset Management who invests in additional tier 1 (AT1) bank debt.Explainer: What’s AT1 debt and why does it matter? FT’s Thomas Hale breaks down the controversy around the wiped-out debt at the centre of the Credit Suisse takeover.3. Chinese property developer Evergrande has released a new timeline for its restructuring process, after repeatedly missed its own self-imposed deadlines. At a Hong Kong court hearing yesterday, the company said that it would release a term sheet on Wednesday.4. The IMF has backed a $3bn bailout for Sri Lanka to help the country restructure its debts and relieve a “catastrophic” economic and social crisis. The deal on the bailout was finally reached after resistance from China was overcome earlier this month.5. Exclusive: Big Pharma has asked for a slice of the US’s $280bn chip industry support package as part of an effort to build up the country’s biotechnology industry and stave off Chinese competition. Read more about the tax breaks and subsidies that drugmakers are requesting. The Big Read

By positioning themselves as rivals to centres like the Cayman Islands, both Hong Kong and Singapore are entering tricky territory © Lightphoto/Dreamstime

As the global pandemic halted travel and shut borders in 2020, two of Asia’s biggest financial centres saw an opportunity. Hong Kong and Singapore saw a chance to challenge the existing offshore centres such as the Cayman Islands and shift the global centre of gravity for world’s the wealthiest families.We’re also reading . . . Xi-Putin: Behind the talk of peace, the substance of the Xi-Putin summit will push in the opposite direction, writes Gideon Rachman. It will involve increased Chinese support for Russia, as it wages a war of aggression.Wirecard scandal: Like his grandson Jan, the mastermind of the Wirecard fraud, Hans Marsalek was suspected by Austrian authorities of being a Russian spy.Credit Suisse rescue: An unmissable play-by-play of how the Swiss National Bank, regulator Finma and minister of finance forced UBS to save Credit Suisse.Graphic of the dayThe world is “more likely than not” to miss its target to keep global warming to 1.5C in the near-term, according to a new UN report. Climate change already taking place will continue across the lifespan of three generations born in 1950, 1970 and 2020 — as shown below. Some regions have already reached the “limits” of what they could adapt to.

Take a break from the newsWhat’s behind the success of the “cleanfluencers”? They dispense housekeeping tips to millions of social media followers — but that’s only part of their appeal, writes Jessica Salter. Additional contributions by Gordon Smith and Tee Zhuo More

The company, which auctions and sells used heavy industrial equipment, last week saw its shareholders vote in favor of the acquisition despite the pushback from Institutional Shareholder Services and Glass Lewis. The proxy advisory firms on March 6 recommended that shareholders reject the deal due to potential risks including a lag in IAA’s performance and a drop in stock price since the bid was announced in November. Under terms of the transaction, IAA shareholders would get $12.80 per share in cash and 0.5252 common shares of Ritchie Bros for each share of IAA common stock they own.Ritchie Bros in January sweetened the cash component of its buyout offer for IAA Inc by 28%, valuing the U.S. auto retailer at $5.94 billion, and also secured the backing of a key IAA shareholder which had questioned the initial offer. With the deal having closed, Ritchie Bros shareholders hold 62.8% of the combined company and IAA stockholders own the rest. IAA’s common stock ceased trading on the New York Stock Exchange under the ticker symbol “IAA” as of the close of trading on March 20. More