Having announced an extension of its private bond-buying facilities earlier, the US Federal Reserve (Fed) recently offered another push toward restoring the investors’ confidence. Key quotes: The Federal Reserve Board on Monday announced it will be seeking public feedback on a proposal to expand its Main Street Lending Program to provide access to credit for nonprofit organizations.
The Fed announced on Monday that it will start buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers. The SMCCF will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of US corporate bonds.
The US Federal Reserve announced on Monday that the Main Street Lending Program is now open for lender registration. "Participating main street lenders must register using the lender portal, which provides secure access and verification," the Fed added. "Business borrowers must apply for the main street loans through a participating lender."
The bank has your back – that is the message from the Fed to investors. There are no signs of Fed fatigue – the commitment to support the economy remains strong and should boost stocks while dollar printing will likely keep the dollar down.
The Federal Reserve finally put numbers to the events and policies of the past three months issuing its delayed projection materials, forecasting that the US economy will contract 6.5% this year and unemployment will be 9.3% in December.
At yesterday's FOMC meeting minutes we saw that the Fed had been concerned about the unemployment picture. Jerome Powell has previously stated that unemployment in the US could hit 25%. The minutes from April's rate setting meeting also showed there is deep concern not just about the current state of the economy, but also what lies ahead.
The dollar has been gaining since Fed minutes dismissed the idea of negative US interest rates. Demand for the dollar has been bolstered by cooling market sentiment. The minutes are little stale since we've just heard fresher comments from Fed Chair Jerome Powell in his testimony to Congress this week.
"Whatever it takes" – that phrase belongs to then-European Central Bank President Mario Draghi, who lifted the euro from existential risk. Yet that is the message from the Federal Reserve as it takes stocks from its massive stimulus to mitigate the economic fallout from coronavirus.
In any event, the Fed remains the world’s most important central bank, and arguably the most important policymaking body when it comes to financial markets, so traders still tuned in for the latest economic assessment from Jerome Powell and Company.
EUR/USD is trading below 1.13, steady. ECB President Lagarde hinted she will pause in next week's decision while urging leaders to agree on fiscal stimulus. US coronavirus data and Sino-American relations are eyed.
Gold is trading above $1,800, highest since 2012, topping its previous high of $1,797 which now serves as support. The next levels to watch are $1,810 and $1,825. Further out, investors are eyeing $1,911 – the 2011 peak – and $2,000.
WTI recedes from intraday top while also keeping the bounce off daily low near $40.30. Global pressure on China, coronavirus resurgence keeps a lid on the blackgold. European oil giant follows BP and Shell to cut price forecast. EIA Crude Oil Stocks expected to drop 3.4M versus prior fall of 7.195M.
GBP/USD is trading around 1.2550, holding onto its gains. UK Chancellor Sunak is set to lay out the fiscal stimulus plan. Brexit remains deadlocked as Johnson told Merkel that Britain could leave without a deal.
Markets are looking for a new direction after stocks retreated and the dollar gained some ground on Tuesday. Concerns about coronavirus cases in the US and geopolitical tensions are in play.
With a pre-set regularity, a nation's Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks.
In the US, the Board of Governors of the Federal Reserve (FED) meets at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, as it is understood as a sign of a healthy inflation. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency.
If rates remain unchanged, attention and also main news and analysis turn to the tone of the FOMC (Federal Open Market Committee) statement, and whether the tone is hawkish, or dovish over future developments of inflation.
The Federal Reserve System (Fed) is the central banking system of the United States and it has two main targets or reasons to be: one is to keep unemployment rate to their lowest possible levels and the other one, to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Fed official website, on Twitter and Facebook
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31,
2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury
under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.
