"In his closing remarks, Powell made it clear that he doesn’t think a downturn is imminent and, by extension, he doesn’t see a recession on the horizon either -- ending the press conference on an upbeat note." -- Enda Curran
26. 9. 2024 - Josef Brynda
China’s top leaders ramped up efforts to revive growth with pledges to support fiscal spending and stabilize the beleaguered property sector, giving new momentum to stimulus measures aimed at arresting a slowdown in the world’s second-largest economy.
President Xi Jinping’s huddle of the 24-man Politburo concluded with a promise to strive to achieve the country’s annual economic goals, the official Xinhua News Agency reported Thursday. Officials pledged action to make the real estate market “stop declining,” their strongest vow yet to stabilize the crucial sector after new-home prices fell in August at the fastest pace since 2014.
The government will also strictly limit the construction of new-home projects, the Politburo said, as part of efforts to ease residential oversupply — although such building has ground to a near-halt.
25. 9. 2024 - Josef Brynda
These developments may influence forex markets, affecting USD strength, commodity currencies, and overall market sentiment.
23. 9. 2024 - Josef Brynda
The start of a new rate-cutting cycle at the Federal Reserve has bank investors hoping for a return to 1995.
That was the year the banking industry began one of its best runs in US history following a series of new rate cuts from the Fed and a soft landing engineered by then-central bank chair Alan Greenspan.
An index broadly tracking the sector finished 1995 up more than 40%, outperforming the S&P 500 (GSCP). And that outperformance would hold for two more years.
Could it happen again?
So far, bank stocks are off to a good start. This year, the same banking industry index that soared in 1995 (^BKX) is up more than 19%, just behind major stock indexes.
Meanwhile, another index (XLF) tracking big banks along with other major non-bank financial firms is up 21%, just ahead of major indexes.
"History isn’t likely to repeat, but it may rhyme," Mike Mayo, a Wells Fargo analyst who covers the country’s largest banks, said of the 1995 comparison.
Mayo isn’t counting on next year being as good as that mystical year, but he does see similarities.
18. 9. 2024 - Josef Brynda
The Fed has cut interest rates by 50 basis points, marking the arrival of a long-anticipated event. The central bank has indicated a continued inclination towards further rate cuts. The market’s reaction to this move will be particularly interesting to watch, as several scenarios could unfold.
While Chairman Powell has emphasized that there are no clear signs of a recession, the market may perceive this rate cut as a preemptive "emergency brake" to prevent economic downturn. On the other hand, it could stimulate markets, as lower interest rates may make financial conditions more attractive for both consumers and businesses, potentially boosting economic activity.
This delicate balance between market perception and actual economic conditions will be critical in shaping future monetary policy and investor sentiment.
"The Fed delivered what the market wanted. The market is happy with the Fed. Market is still ahead of the Fed a bit, pricing 75 bps for the year. With unemployment and PCE estimates very close to (the current levels), it’s easy for them to (cut more) than what is in the dots." --Xe Xie
18. 9. 2024 - Josef Brynda
The Federal Reserve is widely expected to lower interest rates this week after holding borrowing costs at a two-decade high for more than a year.
By how much, however, remains an open question.
Forecasters largely anticipate the Federal Open Market Committee will reduce rates by a quarter point to a range of 5% to 5.25%, though economists at JPMorgan Chase & Co. expect a bigger, half-point move. Investors see better-than-even odds of a half-point adjustment.
9. 9. 2024 - Josef Brynda
USD Performence Consumer price index
Policy rate decisions since the pandemic
5. 9. 2024 - Josef Brynda
The dollar slipped against most major currencies on Wednesday after July U.S. job openings data signaled a softening labor market, tilting the odds further in favor of larger interest rate cuts by the Federal Reserve.
Traders boosted bets that the Fed will deliver a half-a-percentage-point reduction at its next meeting, following news that job openings in July fell to the lowest level in 3-1/2 years.
Friday's U.S. payrolls report could offer further clues on the timing and pace of Fed rate cuts.
"The U.S. central bank must not keep interest rates too high much longer or it risks causing too much harm to employment, Atlanta Federal Reserve President Raphael Bostic said on Wednesday.
The dollar index, which measures the U.S. currency's strength against six major peers, was down 0.3% at 101.4. The dollar slipped 1% to 144.07 yen, a one-week low, as global financial markets generally avoided riskier assets.
3. 9. 2024 - Josef Brynda
The US dollar has recently faced mounting pressures, raising concerns about whether this signals the beginning of a more sustained period of weakness. August was the dollar's worst month of the year as the July US jobs report and Fed Chair Powell’s comments at Jackson Hole signaled there could be a larger rate cut of 50 basis points coming at the Fed’s September meeting.
The US Dollar spot index (DXY) was down 2.3% in August, registering its second-worst month since the start of 2023 and slipping to over one-year lows.
This came along with US economic data remaining mostly resilient, and soft landing hopes continuing to gain traction. This lands the US dollar in the middle of the ‘dollar smile’ theory, which makes the USD prone to drawdowns as investors go on a hunt for higher yields elsewhere.
The speculator positioning in the US dollar, as a result, has shifted to a net short in the week of August 27 for the first time since January. These developments have led to increased scrutiny of the factors driving the dollar's current trajectory and the risks that could further undermine its position
28. 8. 2024 - Josef Brynda
Nvidia Earnings Anticipation Markets are on edge awaiting Nvidia's Q2 fiscal 2025 earnings report, due after Wednesday's close. As a bellwether for AI and the broader market, Nvidia's results could significantly impact market sentiment.
High Expectations Analysts predict Nvidia will forecast over 70% revenue growth for the current quarter. Options markets imply a potential 10% stock move post-earnings. Nvidia shares have surged 160% year-to-date and 1,000% since October 2022.
Commodities Decline Global commodities weakened on Wednesday. Oil, gold, and metals prices fell, with rising Chinese inventories pressuring demand. Mining stocks like Anglo American, Rio Tinto, and Glencore declined as a result.
Buffett Reduces Bank of America Stake Warren Buffett's Berkshire Hathaway sold an additional $982 million of Bank of America stock, continuing to trim its position. The total stake reduction is now nearly 13% since mid-July, though Berkshire remains the bank's largest shareholder.
Turkish Lira Volatility Turkey's lira experienced a brief, sharp drop in early trading before stabilizing. The currency weakened 1.4% to a record low against the dollar before recovering, puzzling traders.
Labor Market Perceptions The Conference Board's Labor Differential Index, measuring job market sentiment, remains positive but is trending downward. This aligns with declining quit rates, suggesting worsening perceptions of job availability and potentially signaling softening employment expectations.