Peter A Rosenstreich
Swissquote Bank Ltd
To watchers of the US Federal Reserve, the biggest surprise lately was an announcement to end balance sheet reduction in September. This should keep assets near USD3.5 trillion, significantly higher than previously indicated. The Fed is also reducing the cap on US treasuries allowed to mature each month from USD30 billion to USD215 billion in May. Anxieties about a scarcity of reserves in the banking system are the driver. Regulatory shifts since the financial crisis demand banks to maintain safe capital that can be used in case of an economic shock. This has increased the demand for “safe” US T-bills. Interest rates may have peaked: this should put a floor on US equities.
The US domestic economy has failed to generate inflation above the Fed’s 2% target. The risk of a pre-emptive hike would be to push the USD higher and further slow economic activity. The Fed has downgraded its economic growth estimate. GDP growth was lowered for 2019 to 2.10% from a previous estimate of 2.3%. Unemployment is forecast to rise to 3.7% in 2019 against 3.5% at the December 2018 meeting. The Fed’s median for inflation is set at 1.8% in 2019 and 1.9% in 2020 and 2021.
Stay on top of the markets with Swissquote’s News & Analysis
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
Recommended Content
Editors’ Picks
EUR/USD trims losses and rises above 1.0650 as USD weakens Premium
EUR/USD hit a bottom of 1.0634 on Wednesday, the lowest level since mid-March. During the American session, it rebounded and rose back above 1.0670, boosted by a decline in the US Dollar. The Greenback was weighed down by comments from Fed officials suggesting a pause at the next FOMC meeting.
GPB/USD jumps above 1.2400 as USD loses momentum
GBP/USD rose on Wednesday after staging a recovery from 1.2350 to 1.2435 during the American session. The US Dollar weakened across the board following comments from Fed Harker and Jefferson favoring a pause at the next Fed meeting.
Gold: XAU/USD extends gains as risk aversion intensifies Premium
Spot Gold extended its weekly rally to $1,974.76 a troy ounce, its highest in a week. XAU/USD trades around $ 1,965, retaining gains amid broad risk aversion.
Shiba Inu price drops to three-month lows amid community conflicts
Shiba Inu (SHIB) price is trading with a bearish bias as bulls continue to lose ground to the bears. It appears the token burns are not achieving the expected result, given that the meme coin has recorded massive losses since the year started, with more to come as sellers continue to dominate the market.
C3.ai Stock News: After 33% rally, AI shares backtrack ahead of earnings
C3.ai (AI) stock slipped 7.6% to $41.62 in Wednesday’s premarket ahead of quarterly earnings expected after the close. This may just be traders taking profits after Tuesday’s 33.4% surge in the AI stock price.