- Real rates are now rising along with nominal yields due to stimulus optimism and risk appetite, with the USD also off its lows.
- Given that the US economy will continue to positively respond to an additional trillion dollars worth of fiscal stimulus and continued Fed measures, it is quite likely that rates and the dollar may see some better days into 2020.
- This, along with profit-taking by the very active retail investors and COMEX margin increases should see gold consolidate lower.
- Before … new highs ($2,100+, $30+), there will need to be confirmation that the Fed will indeed suppress yields, consider average inflation targeting and there are signs that inflation may move higher
- At the same time, markets will want to see if monetization of debt is in the cards, before talk of these levels becoming sustained is credible.
- TD securities projects an average gold price of $2,100/oz in Q4-2021 and $30/oz silver price during the same period
Archives of “Orders of magnitude (numbers)” tag
rssPelosi says offered to reduce aid package by $1 trillion and was rejected by White House
Pencil that in
That’s an important detail because it means that $2.4 trillion is now the upper limit of what’s possibly coming. Every dollar lower is negative for the economy and risk trades and a potential positive for the dollar.
Previously, the indications were that Pelosi was holding firm around $3.4 trillion.
The meeting that was going to be at the top of the hour has been pushed back to 1:30 pm ET.
Along the same lines, according to The Hill, Chuck Schumer said Mnuchin and Meadows balked at Democratic proposal to set relief package at $2 trillion.
“You should have seen the vehemence: No!”“You should have seen their faces: ‘Absolutely not!'”
The never ending QE story
Via Bloomberg
I came across an interesting Bloomberg piece when the Market’s Live team published a piece on the Market’s Live blog making a case for QE continuing indefinitely. The rationale for the view is that the world’s major banks are not buying debt quickly enough leaving ~$1 trillion of new sovereign bonds for buyers in the months ahead. This mean that the Fed, ECB and BoE will need to increase the pace of purchases in order to maintain the present low bond yield levels.
The devilish deal means that huge COVID-19 support packages is met with a seemingly virtually unlimited amount of bond purchases to keep borrowing costs down.
The Market’s Live team make a greta point. There is no way to go back now we have started down this QE road. Many people now who take mortgages will have no memory of high interest rates and how crippling they can be. Many new mortgages will be based on these ultra low rates which means that the central banks must keep adding to their QE programs and keep the borrowing costs down. Failure to do so will just cripple an economy now that is dependent on low borrowing costs
Gold and silver set to shine
This environment is perfect for both gold and silver to shine in. With central banks committed to do ‘whatever it takes’ to cushion the COVID-19 blow and low yields for the medium term future expect the precious metals to keep moving higher and look for pullbacks for buying.
$1855 looks like an area where we can expect pullback buyers in gold and $21 an area to expect pullback buyers in silver.
EU proposes €750 billion pandemic stimulus fund
Including €390 billion in grants
the EU is proposing a €750 billion stimulus fund. The grants within that fund are proposed at €390 billion. This is lower than the €500 billion that Germany and France propose, but is higher than the €350 billion billion counterproposal from the so-called frugal countries.
- You proposes €1.074 trillion for blocks 2021 – 2027 budget