Fed Coronavirus Cut Analysis: Sell opportunity on stocks? Sugar rush cannot solve supply problem
Shock and awe – the Federal Reserve has cut interest rates by a double-dose of 50 basis points and triggered a stock market rally. The dollar immediately crashed while oil and gold surged. It is a triple rarity: changing rates by a double-dose, doing it in an emergency move, and hardly providing any guidance. As Joseph Trevisani said, the Fed prefers being "more safe than sorry." President Donald Trump has been pressuring the Fed, and he is surely pleased – but he may be in for a bitter surprise. Read more...
Powell throws in the towel: Bears awake, it’s hunting season
The Fed has just announced a cut in the benchmark interest rate of 0.50, leaving the rate at 1%-1.25. After a G7 meeting that had left the market unsettled, the Fed announced a rate cut as a balm to calm nerves of investors… but were investors showing any nerves at all? The S&P 500 was moving comfortably above 3,000 points after yesterday's substantial gains. Read more...
Fed Cuts Rates 50 bps-Further Easing Likely in Store
The Federal Open Market Committee (FOMC) cut its target range for the fed funds rate 50 bps today. The timing of the move was a bit unusual, coming ahead of the next regularly scheduled FOMC meeting on March 18. But as we pointed out in a report we published on March 2, we expected that the Fed would be cutting rates in the near term. The decision to cut rates 50 bps today was unanimously supported by all ten voting FOMC members. In the statement that announced the rate cut, the FOMC said that the “fundamentals of the U.S. economy remain strong.” But it also noted that “the coronavirus poses evolving risks to economic activity.” Read more...
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The Australian Dollar extended its losses against the US Dollar for the second straight day, as higher US Treasury bond yields underpinned the Greenback. On Wednesday, the AUD/USD lost 0.26% as market participants turned risk-averse. As the Asian session begins, the pair trades around 0.6577.
EUR/USD stuck near midrange ahead of thin Thursday session
EUR/USD is reverting to the near-term mean, stuck near 1.0750 and stuck firmly in the week’s opening trading range. Markets will be on the lookout for speeches from ECB policymakers, but officials are broadly expected to avoid rocking the boat amidst holiday-constrained market flows.
Gold price drops amid higher US yields awaiting next week's US inflation
Gold remained at familiar levels on Wednesday, trading near $2,312 amid rising US Treasury yields and a strong US dollar. Traders await unemployment claims on Thursday, followed by Friday's University of Michigan Consumer Sentiment survey.
President Biden threatens crypto with possible veto of Bitcoin custody among trusted custodians
Joe Biden could veto legislation that would allow regulated financial institutions to custody Bitcoin and crypto. Biden administration’s stance would disrupt US SEC’s work to protect crypto market investors and efforts to safeguard broader financial system.
US inflation data in the market purview
With next week's pivotal US inflation data looming, we're witnessing a stall in stock market momentum and an uptick in US Treasury yields. This shift comes amid murmurs of hawkish sentiment from Fed speak. Indeed the mind games intensify even further as investors cling to their rate cut hopes.