Tag Archive: Federal Reserve
Digital Currency And Gold As Speculative Warnings
Over the last few years, digital currencies and gold have become decent barometers of speculative investor appetite. Such isn’t surprising given the evolution of the market into a “casino” following the pandemic, where retail traders have increased their speculative appetites.
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Presidential Elections And Market Corrections
Presidential elections and market corrections have a long history of companionship. Given the rampant rhetoric between the right and left, such is not surprising. Such is particularly the case over the last two Presidential elections, where polarizing candidates trumped policies.
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Valuation Metrics And Volatility Suggest Investor Caution
Valuation metrics have little to do with what the market will do over the next few days or months. However, they are essential to future outcomes and shouldn’t be dismissed during the surge in bullish sentiment. Just recently, Bank of America noted that the market is expensive based on 20 of the 25 valuation metrics they track.
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Fed Chair Powell Just Said The Quiet Part Out Loud
Regarding the surprisingly strong employment data, Fed Chair Powell said the quiet part out loud. The media hopes you didn’t hear it as we head into a contentious election in November. Over the last several months, we have seen repeated employment reports from the Bureau of Labor Statistics (BLS) that crushed economists’ estimates and seemed to defy logic. Such is particularly the case when you read commentary about the state of the average...
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The US Dollar and Rates Rise Further
Overview: The US dollar and interest rates have continued to
rise after the strong employment report before the weekend helped drive home the
Fed's message at last week's FOMC meeting. The greenback has been bid to new
highs for the year against the G10 currencies but the Canadian dollar. The
dollar also rose to a marginal new high for the year against the Chinese yuan. Interest
rates are jumping, and the market has downgraded the chances of a May...
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Sobering PMI Readings Sap Risk Appetites
Overview: As US markets prepare to re-open from yesterday's holiday, the dollar
is trading mostly higher, though the euro and yen are steady to slightly firmer.
Narrow ranges are prevailing. The Canadian and Australian dollars are
exceptions and are off about 0.3%. Emerging market currencies are mostly lower,
including Russia, China, South Africa, and Turkey. Final service and composite
PMIs were mostly revised lower in Japan, Australia, and the...
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BOJ Stands Pat while the Dollar is Consolidating Ahead of the Weekend
Overview: The market has not yet become convinced
that the Fed will in fact deliver the two hikes the median dot anticipates this
year, and the dollar was sold off sharply yesterday, the day after the FOMC
meeting. In fact, the swaps market is more convinced that the ECB hikes in July
than the Fed. Outside of the yen, which was sold after the BOJ stood pat, the
G10 currencies are mostly little changed, consolidating the recent moves. Emerging...
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ECB’s Turn
Overview: The Fed's
hawkish hold and signal that it may raise rates two more time this year sent
ripples through the capital markets. Risk appetites have been dealt a blow. However,
China's rate cut and likely additional supportive measures after disappointing
data, helped lift the CSI 300 by 1.6%, the most this year. The Hang Seng rose
by nearly 2.2%, the most in three months. Europe's Stoxx 600 is snapping a
three-day advance and US index futures...
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Dollar Comes Back Bid, as First Republic Taken Over (Mostly) by JP Morgan
Overview: Most markets are closed for the May Day
holiday. News that JP Morgan will acquire most of First Republic assets will be
a relief for the markets. US equity futures are slightly firmer, and the
10-year Treasury yield is around three basis points higher, slightly above
3.45%. Recall that before the weekend, it has fallen from almost 3.55% to 3.42%.
The market has more than a 90% chance of a quarter-point hike discounted for
Wednesday. The...
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Greenback Pares Yesterday’s Gains
Overview: As the long-holiday ends, risk appetites
have returned. Equities and yields are mostly higher. The dollar is seeing
yesterday's gains pared. Yesterday's setback in the yen helped lift Japanese
stocks, with the Nikkei advancing 1%. Several other markets in the region also
gained more than 1%, including Australia and South Korea. China's CSI was an
exception. It slipped fractionally. Europe's Stoxx 600 is up nearly 0.6%
through the European...
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The Dollar Jumps Back
Overview: The pendulum of market expectations has
swung dramatically and now looks for 100 bp cut in the Fed funds target this
year. That seems extreme. At the same time, the dollar's downside momentum has
stalled, suggesting that the dollar may recover some of the ground lost
recently as the interest rate leg was knocked out from beneath it. The euro
twice in the past two days pushed through $1.09 only to be turned away.
Similarly, sterling pushed...
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Market Hears Dovish Fed Hike and Sells Dollars
Overview: The dollar remains under pressure
following the Federal Reserve's rate hike. The market thinks it heard that the
Fed was done hiking, even though Fed Chair Powell held out the possibility that
"some additional firming may be necessary." The Norwegian krone
is the strongest of the G10 currencies today, up more than 1%, spurred by a 25
bp hike and a commitment to do more. The Dollar Index briefly traded below
102.00 for the...
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North America likely will Sell USD Bounce Seen in Europe
Overview: The failure of the Federal Reserve to push harder against the market's dovish views and the easing of financial conditions encouraged a risk-on trade that saw the dollar and yields slump and equities rally. There has been limited follow-through dollar selling today, and a small recovery ahead of the Bank of England and European Central Bank meetings.
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“Markets and civil society are win-win institutions, government and politics are zero-sum.”
Division, friction and polarization have been on the rise in the West for at least a decade, but the escalation we saw during the “covid years” was especially worrying. Over the last year, this “worry” has become a truly pressing concern, even a real emergency one might argue, as inflationary pressures and an actual war were added to the mix of political and social tensions.
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“It begins”: The rise of the digital dollar
In mid-November, while the whole world was focused on the Ukraine crisis, the US midterms or whatever other “big story” the media decided was more important, a truly momentous shift took place in the global financial system. It might seem like a small step on the surface, but it has the potential to bring about a real and possibly irreversible sea change in the way we use money; or better said, the way it uses us.
As Reuters reported on the...
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Is Central Banks’ License to Print Money About to Expire?
2022-10-29
by Stephen Flood
2022-10-29
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