Phil Carr
The Gold & Silver Club
May is certainly shaping up to be an incredibly profitable month with the global banking crisis, credit crunch, escalating recession risk and America edging closer to defaulting on its debt for the first time in history, now emerging as the four biggest macro themes driving the Commodity markets.
This week is all about the macroeconomics with trader’s attention firmly focused on a string of hotly anticipated data releases including the FOMC Monetary Policy Meeting Minutes, U.S PCE Inflation and GDP Data – all topped off with yet another round of “make-or-break” U.S debt ceiling talks.
Taking front and centre stage will undoubtedly be the Minutes from the Federal Reserve’s May Monetary Policy Meeting.
The stubbornness of high inflation is dividing the Federal Reserve over how to manage interest rates in the coming months, leaving the outlook for the Fed’s policies cloudier than at any time since it began raising rates back in March 2022.
Last week, a number of top Fed officials expressed the need to continue raising interest higher as ‘insurance’ against inflation.
As always, the FOMC Meeting minutes will be highly scrutinized by traders for clues into the central banks future monetary policy plans. But most importantly, whether the hawkish comments recently made by several voting members of the Fed's policy-setting committee match up with the notes from the latest Meeting Minutes or completely contradict them
Elsewhere, with the clock rapidly ticking on a self-imposed economic catastrophe – all eyes this week will be U.S debt ceiling talks.
Playing chicken with the economy is not unusual for Congress and the President. In fact, there have been no fewer than 80 major fiscal standoffs between Republicans and Democrats since the 1960s – just like we're seeing play out again, right now!
No country should run fiscal affairs as high drama. Greece in 2015 and the UK last year offer cautionary tales of what goes wrong when politics and the public finances collide, but yet U.S politicians do not feel they need to learn from the mistakes of other countries.
The United States is $31.4 trillion in debt. This staggering amount is in the spotlight because if this cap is not lifted – the federal government, which borrows huge sums of money to pay its bills – will run out of cash as early as June 1.
According to U.S Treasury Secretary Janet Yellen “the impact of a U.S debt default on the global economy could rival the 2008 global financial crash”.
Extraordinary times create extraordinary opportunities and right now, as traders we are amidst one of the greatest eras of wealth creation the world has seen. When you consider the full magnitude of events that are currently unfolding, it should come as no surprise to see why Commodities are everyone’s favourite trade once again!
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.
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