Archives of “December 17, 2020” day

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Brexit: The EU27 member states head to Brussels

  
  Analysis

Friday meeting to discuss Brexit developments

The EU 27 member states enjoys will be heading to Brussels to get a Brexit update at 830 GMT on Friday. This according to EU diplomats.
There are some mixed messages, but there is also signs of progress in negotiations.  EU’s Barnier said earlier that a deal is ‘possible’ by Friday.  In contrast not long after Barnier’s comment, an EU diplomat said “A deal is unlikely by Friday”.

Gold hits one-month high with US stimulus deal in sight

  
Analysis, Gold / Silver

Gold higher in third day of gains

Gold is back in a big way.
The selling in late November has now been erased with gold trading $30 higher to $1895. That’s the best level since November 16.
The next level to watch is the $1900 figure, which also coincides with the Nov 16 intraday high. The daily chart shows a minor inverted head-and-shoulders pattern as he head into the bullish seasonals of Jan-Feb.
Gold higher in third day of gains
To really get gold back on track, it it will need to take out the November high of $1965 to halt the six-month period of lower highs.

SNB leaves policy rate unchanged at -0.75%

  
  Analysis

SNB announces its latest monetary policy decision – 17 December 2020

  • Prior -0.75%
  • Sight deposit interest rate unchanged at -0.75%
  • Swiss franc is highly valued
  • Will remain active in FX market as necessary
  • Expansionary policy provides favourable financing conditions
  • Also counters upward pressure on Swiss franc
  • Sees inflation this year at -0.7%, 2021 at 0.0%, 2022 at +0.2%
  • Assumption is there will not be significant easing on virus measures until spring
  • Recovery thus remains incomplete
  • Global economy is still subject to high uncertainty
  • Full statement
No change to the language on the franc or on intervention, and a slight downgrade to its inflation outlook for this year and next. That’s about it from the SNB, in what is a rather non-event really as they reaffirm a similar stance to September.

Nikkei 225 closes higher by 0.18% at 26,806.67

  
Analysis, Global Indices

Asian equities keep higher after the Fed yesterday

Nikkei 17-12
Modest gains for Japanese stocks, with the rest of the region seeing a similar mood. The Hang Seng is up 0.3% while the Shanghai Composite is up 0.8%.
Elsewhere, US futures are up by ~0.3% as we look towards European trading with Nasdaq futures near record highs. US stimulus talks are dragging on but the market is keeping hope of a more optimistic outcome for the time being.

 

In the currencies space, the dollar is the weakest performer following the Fed decision yesterday – which mainly reaffirmed the status quo in the market.

US FDA welcomes extra doses of Pfizer COVID-19 vaccine, sees potential 40% boost to supply

  
  Analysis

US Food and Drug Administration:

 

  • says Pfizer vaccine vials hold extra doses, expanding supply
  • says “given the public health emergency, FDA is advising that it is acceptable to use every full dose obtainable”
  • pharmacists have found a way to squeeze extra doses out of vials of Pfizer’s vaccine, potentially expanding nation’s scarce supply by up to 40%

 

Report from Politico, via Reuters

Fundamental valuation of Bitcoin is USD 400,000

  
Analysis, BITCOIN

Guggenheim Global Chief Investment Officer Scott Minerd comments on Wednesday in a Bloomberg interview

(Scott Minerd is the chief investment officer for $5.3bn Guggenheim Macro Opportunities Fund)
  • says his team’s fundamental work suggests Bitcoin should be worth $400K
  • “It’s based on the scarcity and relative valuation such as things like gold as a percentage of GDP. So you know, Bitcoin actually has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.”
Its no secret the fund likes BTC, this from about 3 weeks agaio:
  • A Guggenheim fund may invest up to 10% of assets in bitcoin
BTC has been on a roll, fresh highs Wednesday US time:
  • Bitcoin breaks above $20,000 for the first time ever.
And, its gone higher since:
Guggenheim Global Chief Investment Officer Scott Minerd comments on Wednesday in a Bloomberg interview

FOMC statement: Will continue pace of bond buys until ‘substantial’ progress on goals

  
  Analysis

Highlights of the December 16, 2020 FOMC statement

FOMC in better times
  • No change in weighted average maturity of portfolio
  • Rates left unchanged at 0.00%-0.25%
  • Interest on excess reserves % vs +0.10% expected
  • Repeats that “committed to using its full range of tools to support the U.S. economy”
  • Will continue to buy $80B/month in Treasuries and $40B/month in MBS
  • Will continue bond buys “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”
  • Repeats that “The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term”
  • Dot plot at end of 2023 remains at zero.
  • Full text
What’s new is the guidance about when the Fed will start to taper QE. We’re left with the question of what is ‘substantial progress’? You would have to think that’s a couple points lower in unemployment and a continued rise in inflation. Clearly, it leaves the Fed plenty of wiggle room.
The Fed set up the sequencing here saying it will taper after “substantial progress” but will keep policy “accommodative” until they “achieve inflation moderately above 2 percent for some time.”

FOMC statement from the December 16 rate meeting

  
  Analysis

No change in rates

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses. (more…)

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