Tuesday , January 31 2023

Where will the golden bulls not be shocked? A little trick the Fed can solve doubts for you – Federal Reserve, raising interest rates, returning files, twice, pigeons – Huitong Net


2018-12-20 21:51:29 Source: Huitong Net

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On Thursday (December 20th), spot gold was released from the closing shadows of the previous day, approaching a five-month high. Because despite the fourth growth rate in the Fed in the year, concern over a possible slowdown in the US economy worsened next year, and Federal government's expectations of easing austerity policy rose or not, and the US dollar index hit a new level.

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Moreover, the renewed interest rate of the Federal Bank for Exceeding the Required Reserve (IOER) and the limit level of federal funds is also considered a move that emphasizes policy.

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Citations show that gold rose 1.06% to $ 1.256.26 per ounce, approaching an intraday high of $ 1258.09 per ounce since July, and the gold fund of COMEX rose by 0.25% $ 1259.3 per ounce, the US dollar fell 0.71% to 96,395, and intraday hunting reached 96,183 since November 20th.

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The Fed raised interest rates by 25 basis points and expects the interest rates of the next year to be less than expected at a policy meeting in September, which is in line with market expectations. But what surprised the market is that the Fed is committed to maintaining the core content of the monetary policy tightening plan, despite the uncertainties in global economic growth. Spot gold closed down on Wednesday (December 19th) and recorded 0.51% of the biggest one-day decline since November 27, while the US dollar was complementing all the losses during the day.

The yield curve is dense and bruised

Although the federal dot matrix is ​​currently proposing a double increase in the rate for the next year, the market remains skeptical and expects an increase in interest rates once again, reflecting an increased market concern in the global economy. As the yield curve of US bonds rose to 10 basis points, it was slightly slightly more than an 11-year low earlier this month.

The bond yield curve is reversed, ie the long-term bond yield falls below short-term bond yields, and the yield curve of US bonds is widely regarded as an indicator of the future economic downturn. These doubts cause risky assets such as the stock market. The wolf broke up, and the dollar again felt its weakness.

Alvin Tan, a currency strategist at Societe Generale in London, said: "Today we see confusion in the currency market and the dollar is hard to get the momentum after the Fed meeting."

Moreover, Fed Chairman Povell suggests at a press conference that the two increases in the expectation rate in 2019 are not determined. He hinted that economic data will determine what the Fed will end next year.

He told reporters: "There may be circumstances in which it is convenient to outperform a neutral interest rate, and perhaps situations in which it is completely inappropriate."

Selena Ling, head of the research department of the OCBC, wrote in the client's report: "We anticipate that FOMC will raise interest rates twice instead of three times next year, but the point is that we basically return to the state of reliance on data, or in economic growth. With additional pay durability, wage inflation is accelerating further, so as long as the data is supported, there is no reason for FOMC to raise interest rates at the third rate. "

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