Archives of “June 2019” month

rss

Markets Rally on Rate Cut Hopes

  
  Analysis

Hold aside the obvious contradiction for a moment — Why does the greatest economy ever necessitate rate cuts? — and consider for a moment the effective jawboning at the Federal Reserve. POTUS on down have been demanding lower rates, which markets like, and the President equates higher stock prices with successful ratings.

Moving the Fed to cut rates has been a priority to this administration — never mind that POTUS appointed two hawks as Chair and vice-chair, who may have had the wrong policy views, but at least were of appropriate height.

We have seen a yuuge move higher in markets since members of the Federal Reserve made noise that recognized the demand for “rates to be lower.” Even if it was insincere posturing to get POTUS off of their backs, the markets really really liked it.

Here’s the thing: What do markets know? When it comes to the Federal Reserve future actions, apparently not much. Torsten Sløk explains:

Quantifying the impact of the US trade war is almost impossible, but the market seems convinced that the trade war will lead the Fed to cut rates significantly. The problem is that the market doesn’t have a great track record at predicting what the Fed will do, see chart below.

An Update :US Dollar Index ,Euro ,INR ,YEN ,GBP ,CAD ,AUD ,Mexican Peso ,GOLD ,SILVER ,SPX 500 -Anirudh Sethi

  
Analysis, Crude, Forex, US Market
The US dollar fell against all the major currencies last week, and the technical indicators warn the further losses are likely.  Market speculation that the Federal Reserve will be forced to cut rates more than once this year has strengthened.  It is outpacing the expectations that the ECB and BOJ will have to ease policy as well.  Canada’s firmer data, including a surge in job creation, and Norway’s shift to a less accommodative monetary stance, are notable exceptions.  The Bank of England may be as well, but the uncertainty about Brexit and the risk of a no-deal exit at the end of October suggest steady policy may continue to be appropriate.
President Trump hinted that the new tariffs on Mexico would not be implemented while the markets were open before the weekend.  The peso rallied on the news, and the deal that led to the “indefinite suspension” of the tariff was confirmed.  To be sure, the “suspension” means the tariffs and the claim of emergency powers remains on the books, and that the proverbial Sword of Damocles continues to be an implicit threat whose suspension can be lifted at the will or whim of the US President.
   To read more enter password and Unlock more engaging content

Nikkei 225 closes higher by 0.53% at 20,884.71

  
Analysis, Global Indices

Tokyo’s main index climbs on more optimistic tones in Wall St overnight

Nikkei 07-06
There’s also a hint of optimism that trade talks between US and Mexico will see some positive news before the week ends, so that’s lending to better sentiment in Asian trading today. That said, markets will still be keeping a watchful eye on further talks during the US session and also on the non-farm payrolls data to come later today.
European futures are expected to mirror mild gains in US equity futures but overall risk sentiment remains more flat until we clear the risk events noted above. USD/JPY holds near flat levels at 108.44 currently with currencies still in a bit of a lull.
Go to top