April 30, 2021SharePrint
Everyone on Wall Street is trying to figure out if the peak in Treasury yields will stick for a while now that the US is approaching peak growth. The best expansion since World War 2 is being accompanied with a Fed that remains committed to supporting the economy until a complete recovery. The playbook for many traders appears to be the Fed could announce at the June FOMC or at the Jackson Hole Symposium that they are ready to start talking about tapering, paving the way for a gradual reduction of the $120 billion per month in asset purchases.
Another busy week ahead has several key economic releases, central bank speak, and a couple of big interest rate decisions. In the US, traders will closely watch the ISM Manufacturing reading and Market PMIs, durable goods, factory orders, and the nonfarm payroll report, which could show over a million jobs were created in April. We will hear from ECB’s Lagarde, Fed Chair Powell and his colleagues Daly, Kashkari
Posted 5 hours agoSharePrint
Wall Street could see more volatility during a very busy trading week that is filled with a wrath of central bank decisions, surging international COVID-19 cases, solid economic data, effects of stimulus working its way through the economy, and pent-up consumer demand. Financial markets are edge, especially considering how quickly stocks sold off following news of the White House plans for capital gains tax. A lot of the good news has been priced in for the US and some investors are focusing on Europe’s recovery potential.
The Fed will likely stay the course at the April policy meeting. The Fed will have to become even more optimistic given the better-than-expected vaccination rollout and improvement in the labor market. The Fed will stick to the script that the recovery is incomplete and that more support is warranted. Greater clarity that they will tolerate most inflation for the rest of the year could provide what the bond market needs to
4/5/2021 12:37:18 AM GMT
The demise of America and the dollar has been an often-told tale. Some even suggested that the sharp appreciation of the purely speculative crypto-token (Bitcoin) confirmed the loss of the US and the dollar s privileged position in the world economy. In fact, quite the opposite appears to be taking place. The latest reserve data from the IMF shows that foreign central banks held more dollars in reserves than ever before at the end of last year, over $7 trillion. The more timely custodian holdings at the Federal Reserve show that Treasuries held for foreign central banks reached a new record high last month.
by Tyler Durden
Thursday, Mar 11, 2021 - 07:27 AM
After touting the flexibility of its asset purchase program for preserving favorable financing conditions, the European Central Bank has been surprisingly inactive in the face of the recent bond market rout, with its net bond purchases declining in the past two weeks. According to Bloomberg economist Maeva Cousin, ECB President Christine Lagarde is set to reiterate this flexibility today, but she now seems unlikely to signal its imminent use.
That will leave the Governing Council facing increased scrutiny of its reaction function.
Some thoughts:
The ECB has emphasized its intention to preserve favorable financing conditions to support the recovery. Anticipate a clear message from the Governing Council that a substantial part of the recent increase in bond yields is unwarranted.
US
The main event in the US is the Fed’s policy meeting. After several months of ultra-accomodation, the Fed seems to be inundated with questions on when is the time to taper. Fed Chair Powell earlier in the month signal now is not the time to talk about exiting. The Fed will likely reiterate their support for fiscal support and remind markets of the short-term risks. Inflation signs have picked up but are not yet at a worrisome level.
Big tech has led the recent charge higher for US stocks and Wednesday after the close will likely let us know if investors are still on board. Huge earnings will come from Facebook, Apple and Tesla.