Tag Archives: Federal Reserve

The interest in Modern Monetary Theory has grown as the limitations of ‘mainstream’ economic theories have become ever plainer to see since the financial crisis.Modern Monetary Theory (MMT) is a theory, initially emanating from left-wing US economists, that argues that since governments, and in particular the US government, issues its own currency, it can never run out of funding.The corollary is that it is possible for the government to spend more to push the economy towards its full growth...

Three events that will capture the market’s attention next week: The consequences of the Japanese election, the first look at US Q1 GDP, and the ECB meeting. The central banks of Turkey and Russia also meet. Both are expected to cut interest rates, following rate cuts in the middle of last week by South Korea, Indonesia, and South Africa. Japan goes to the polls on July 21 to elect the upper chamber of the Diet. There...

Swiss Franc The Euro has fallen by 0.35% at 1.1024 EUR/CHF and USD/CHF, July 19(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates Overview: Comments underscoring the importance of acting preemptively by two Fed officials sent the dollar reeling and helped lift equities after the S&P fell to a two and a half week low. The decline in rates and the US shooting down of an...

Swiss Franc The Euro has risen by 0.22% at 1.1095 EUR/CHF and USD/CHF, July 17(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates Overview: After slapping punitive tariffs on structural from China and Mexico last week, US President Trump threatened to end the tariff truce with China because it is not stepped up its purchases of US agriculture products. Trump said the tariff...

There is little doubt after the Federal Reserve Chairman Powell’s testimony last week and the FOMC minutes that a rate cut will be delivered at the end of the month. Similarly, after comments by several ECB officials and the record of their recent meetin.g confirms it too is prepared to adjust policy. The timing of the ECB’s move is more debatable, an adjustment at the July 25 meeting appears to have increased. While a...

Swiss Franc The Euro has risen by 0.03% at 1.1135 EUR/CHF and USD/CHF, July 10(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates Overview: The US Treasury market is retreating for the fourth consecutive session ahead of Fed Chairman Powell’s testimony before Congress. It is the longest losing streak in six months, and the 10-year yield has risen 15 bp over the run.  This is...

Our hypothesis that the market had reached peak dovishness toward the Fed remains intact after the employment data. Job growth was the strongest since January. The participation rate and the unemployment rate ticked up. Average hourly earnings edged 0.2%  higher, and, with revisions, maintained a 3.1% year-over-year pace, which is a bit disappointing. United States The jobs report trumps the PMI/ISM data and suggests...

Swiss Franc The Euro has fallen by 0.05% at 1.112 EUR/CHF and USD/CHF, July 03(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates Overview: Interest rates are lurching lower. The US 10-year yield is at new two-year lows, but the driver is European bonds where peripheral yields are 6-7 bp lower, though Italy’s benchmark is off 12 bp, while core yields are down 2-3 bp to new...

Since President Trump declared the end of the tariff truce with China in early May, an important focus for investors was the G20 meeting. It was only as it drew near was a meeting between the two heads of state confirmed. What was billed as an extraordinary meeting reportedly lasted less than 90 minutes, and the results were broadly as expected. The press quotes US officials confirming that the talks are “back on track”...

The week ahead is likely to provide some clarification for investors on three fronts that have been a source of uncertainty. The FOMC meeting, with updated forecasts, is center stage. The credit markets are pushing the Fed to be aggressive but can be disappointed. In the eurozone, the preliminary PMI may confirm a modest, even if uneven recovery. The G20 summit is the focus of much attention as many see it as the last...