Focus on things you can control
Archives of “Analysis” category
rssMost economists surveyed say the Federal Reserve to hike by 75bps in July (Reuters poll)
The latest Reuters poll has 67 of 91 analysts polled forecasting a 75-basis-point Federal Reserve rate hike in July.
- would take the fed funds rate to a range of 2.25%-2.50%, which is around a ‘neutral’ level
The Reuters report goes on:
- A strong majority expect the central bank to hike its policy rate by another 50 basis points in September,
- with opinion more split on whether it will hike by 25 or 50 basis points in November.
- A majority expect the Fed to raise rates by 25 basis points at its December meeting.
- That would take the fed funds rate to a range of 3.25%-3.50% by the end of this year, 75 basis points higher than thought in a poll published just two weeks ago.
- “Since the Fed is still underestimating the inflation problem … not recognizing that a wage-price spiral has already started, we expect they will have to raise rates faster than they now expect,” Philip Marey, senior U.S. strategist at Rabobank, wrote in a note. “Unfortunately, the hiking path is also likely to be followed by a recession.”
Over the last 30 days, only ONE has seen inflows to Comex #gold. Total amount of withdrawals – 2,754,875 ounces.
BOJ April minutes confirm the Bank will ease further if necessary, without hesitation
Bank of Japan April 2022 meeting minutes
Minutes are preceded many weeks in advance by the summary,:
Headlines via Reuters:
- Board members agreed no change to BOJ’s stance of taking additional easing steps without hesitation if needed
- One member said rising raw material costs would hurt economy so must keep powerful monetary easing
- One member said japan’s monetary policy challenge is to address too-low inflation, unlike in western economies
- One member said inappropriate to change monetary policy stance as Russia’s invasion of Ukraine adds downside risks to japan’s economy
- One member said BOJ must remain mindful of the need to make its monetary framework sustainable as ultra-loose policy likely to be prolonged
- Several members said forex should move in stable manner reflecting fundamentals
- A few members said recent short-term excessive forex volatility could make it hard for firms to set business plans
- Several members said must communicate to markets that BOJ conducts monetary policy to achieve price stability, not at controlling forex moves
One member said BOJ must look not at commodity, forex moves themselves, but the impact they have on economy and prices
One member said weak yen is positive for Japan’s economy at a time like now, when output gap remains big, inflation trend is very low
Full text:
White House is relying on ‘wiggle room’ to stop economy from recession
Reuters reports on remarks from Heather Boushey, a member of President Joe Biden’s Council of Economic Advisers, on Tuesday at an event hosted by the Washington Post.
- Asked about Biden’s recent comment that a recession was not inevitable, Boushey said she agreed, adding strong family balance sheets, the low unemployment rate and the economy’s ability to weather the COVID-19 pandemic and other “storms,” without elaborating on specific data.
- “That gives us some confidence that should oil prices continue to be high or maybe go up, which would be horrible, … there’s enough of wiggle room that businesses and families will be able to make it through because they have resources to fall back on,”
Sheesh. This does not sound too convincing and I suspect she is just going through the motions. Other members of Biden’s administration are talking the economy up also. For example:
Markets looking ahead to Wednesday US time and Fed Chair Powell speaking
- Powell will be delivering remarks to the US Congress next Wednesday: Fed Chair Powell’s semi-annual testimony on monetary policy before the US Senate Banking Committee
Coming up on 22 June 2022:
Federal Reserve Chair Jerome Powell heads to the US Congress for his semi-annual congressional testimony
- to testify before the Senate Banking Committee on Wednesday
- (then the House Financial Services Committee on Thursday)
Both the Fed and Congress want to lower inflation (as does Biden). Nevertheless, he’ll get a grilling from the Senators. Powell won’t be backing down on his commitment to hiking rates in the months ahead.
I’m awaiting the publication of Powell’s prepared testimony. Its in the Q&A to follow that spontaneous comments will occur.
Powell is up at 1330 GMT.
US stocks close with gains. Gains of greater than 2% for the major indices.
The major US stock indices are closing higher on the day. The major 3 indices are closing with gains of over 2% led by the Nasdaq which rose 2.51%. Having said that, the indices are off the highs.
The final numbers are showing:
- Dow industrial average him rose 641.47 points or 2.15% at 30530.24
- S&P index rose 89.95 points or 2.45% at 3764.80
- NASDAQ index rose 270.96 points or 2.51% at 11069.31
- Russell 2000 rose 28.33 points or 1.7% at 1694.03
The Dow industrial average has been down 11 of the last 12 weeks. That has never happened. The NASDAQ and S&P are down 10 of the last 11 trading weeks.
Looking at the Dow 30, Disney and Home Depot were the only stocks to decline (-1.04% and -0.49% respectively).
The top 3 Dow 30 stocks were:
- United health, +6.51%
- Chevron +4.18%
- Merck, +4.08%
- Verizon, +3.45%
- Walmart, +3.33%
Thought For A Day
U.S. credit card rates over 20 years:
Eurostoxx futures +0.6% in early European trading
German DAX futures +0.6%- UK FTSE futures +0.4%
- Spanish IBEX futures +0.4%
German DAX futures +0.6%That carries over the positive tone from yesterday, though it hardly chips into the fall from last week. For now, equities are keeping the calm but I reckon we might get more volatility once Wall Street enters the fray later today.
Elsewhere, US futures are keeping more positive with S&P 500 futures up 1.5%*, Nasdaq futures up 1.5%*, and Dow futures up 1.3%*.