EUR/USD The EUR/USD pair initially tried to reach at the 1.15 level but failed. Janet Yellen’s speech in front of Congress was a little less hawkish than expected, although it certainly seems as if the Federal Reserve will raise interest rates. This bit of uncertainty could hamper risk appetite, and with that being the case this pair fell. I think that we are getting a little bit rich in valuation when it comes to the Euro, but the most support level to pay attention to in this chart is that the 1.15 level is the top of a three-year consolidation range. I suspect that there is probably more downside risk of an up, but I am the first to admi...
Gold prices rose after markets concluded that Fed Chair Janet Yellen adopted a dovish posture in testimony before a House of Representatives panel yesterday. She seemed wary of recently slowing inflation and suggested that rates won’t need to rise much further to get to a neutral setting. That sent the US Dollar lower alongside Treasury bond yields, boosting the appeal of anti-fiat and non-interest-bearing assets. The second round of testimony is now in focus, with Yellen offering a repeat performance in the Senate. Her prepared remarks will almost certainly follow a familiar script but the subsequent Q&A session may offer new insig...
The hawkish tone and global bond tantrum unleashed by central bankers at the Sintra ECB forum two weeks ago is now a distant memory, and after Janet Yellen surprised markets with an unexpectedly dovish (in the market’s interpretation) testimony yesterday, overnight global shares hit their fourth all-time high in less than a month as concerns about the tightening Fed were laid to rest, sending September and December rate hike odds sliding. One of the Fed chief’s comments that markets latched on to was her view that bank would not need to raise U.S. rates “all that much further” to reach current low estimates of the R...
After opening the day on a positive note, Indian share markets continued their uptrend and ended their day on a positive note. Gains were largely seen in the capital goods sector, banking sector and FMCG sector leading the gains. At the closing bell, the BSE Sensex stood higher by 233 points (up 0.7%) and the NSE Nifty closed higher by 76 points (up 0.8%). The BSE Mid Cap index ended the day up by 0.5%, while the BSE Small Cap index ended the day up by 0.4%. Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 1.1% and the Nikkei stood flat. European markets are trading positively tod...
The June money supply and credit stats out of China confirmed a couple of important trends that we’ve previously identified. The first is the gradual slowing in M2 growth, albeit the absolute pace is still fairly rapid. The second is the continued rapid expansion of credit to support economic growth. The third, and in my view one of the most important, is the slowing in M1 money supply growth. The reason I feel it is an indicator worth closely monitoring is that it appears to have a 4-5 month lead on property price growth and the recent run of the data points to a slowdown in the housing market. Whether this turns out to be ju...
The Federal Reserve Chairman, Janet Yellen, said in her testimony in front of the Congress that the current economic path is expected to call for more gradual increments in the Federal Fund rates. The economy moved upwards in Q2 due to household and business investment spending and stronger world economy. She described the inflation response to the economy as a risk factor. The inflation rate is being monitored carefully, despite the fact that the recent decline was a result of unusual drop in certain bonds. The statement also mentioned that the Federal Reserve won’t need to raise rates much further to reach to the current lower expectation...
In Janet Yellen’s semi-annual testimony on Capitol Hill yesterday, she made reference to the ongoing strength of employment as one of the reasons for continuing to “normalize” monetary policy by lifting interest rates and reducing the existing bond holdings of the Federal Reserve. To wit: “Since my appearance before this committee in February, the labor market has continued to strengthen. Job gains have averaged 180,000 per month so far this year, down only slightly from the average in 2016 and still well above the pace we estimate would be sufficient, on average, to provide jobs for new entrants to the labor force. Indeed, the ...
Ian McCafferty is a consistent hawk in the Bank of England’s Monetary Policy Committee. While his colleagues are deliberating the options of raising rates against rising inflation yet a slowing economy, McCafferty has other ideas. In an interview with The Times, he suggested reviewing the Bank’s policy of Quantitative Easing. He suggests bringing an early end to the bond-buying scheme. This is a hawkish shift. Also the Federal Reserve is on a path to begin unwinding its QE program, probably in September, beginning the reduction of its balance sheet. However, Fed Chair Janet Yellen expressed some concerns over inflation, opening the doo...
The US dollar is mostly consolidating yesterday’s move. Sterling is pushing back through $1.29 as the hawks on the MPC may not have been dissuaded by disappointing PMI readings and the softer earnings growth. The table is being set for another 5-3 vote at next month’s MPC meeting. The Australian and New Zealand dollars are up about 0.6%, gaining nearly twice as much as sterling. The risk-off sentiment, softer yields in the US and Europe, and strong Chinese import data are among the drivers. The Australian dollar surged through the $0.7700 level to challenge a 15-month down trendline that is found near $0.7725.The hig...
Most investors approach the market with a simple game plan: Buy low and sell high. Not a bad way to make your bones at all. In fact, the “value” investment strategy — buying undervalued stocks relative to a company’s industry or the broad market — is based on this idea. But thanks to record-low interest rates and weak economic growth over much of the last decade, value stocks have underperformed the market. At the same time, growth stocks — the issues priced at a premium to the market — have soared. In fact, as valuations climb, many financial talking heads are telling investors to stay out of the market and wait for a crash to ...