Tag: U.S. Fed

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Global Market – Key event for 8 to 12 Jan 2024

Global Market – Key events this week – 8th to 12th January 2024

This week we will cover various events this week and but these events does not have any major impact
on global cues.  China continues to their longest streak of deflation since 2009, threatening a deflationary spiral that may require more government support to reverse.

Brent Oil Hits $80 After Airstrikes Target Yemen’s Houthis

President Joe Biden said strikes had been conducted against a number of targets used by the Iran-backed group, with US officials saying radar sites and missile launchers were hit. A tanker industry group said military forces in the region were advising ships to avoid a key chokepoint near Yemen.

China’s Worst Deflation Streak in 14 Years Puts Pressure on PBOC

China’s consumer prices marked their longest streak of declines since 2009, threatening a deflationary spiral that may require more government support to reverse. Its export growth engine is also faltering.

Bitcoin ETF Trades Top $4.6 Billion in ‘Ground-Breaking’ Day

Over $4.6 billion worth of shares traded between the almost a dozen US spot Bitcoin exchange-traded funds on Thursday. The Grayscale Bitcoin Trust, which converted into an ETF, saw about $2.3 billion in volume, according to data compiled by Bloomberg. Meantime, BlackRock’s iShares Bitcoin Trust—IBIT— saw over $1 billion change hands.

U.S. Mortgage Rates Climb for Second Straight Week, Hitting 6.66%

Borrowing costs have risen slightly as traders grapple with questions around the Federal Reserve’s future path. US inflation accelerated in December, tempering expectations about possible rate cuts from the central bank.

Iran Captures Oil Tanker Off Oman in Deepening Mideast Turmoil

A tanker previously seized by the US for carrying illicit Iranian oil was captured by Tehran off the coast of Oman, heightening tensions in the world’s most important trade lane for global crude supply.

Equichain Wealth Advisors: Market View & Opinion

Market news and events this week does not have any major impact on equity while crude oil has seen spike on Friday as Brent crude oil approaches $80.  China’s is facing deflation and China’s CPI continues to mark longest streak of deflation since 2009.  Rising geo-political tension in Red-sea remain uncertainty in global market.

With recent development and geo-political event unfolding we will remain watchful and these events could trigger risk-off sentiment and provide much needed correction in global market.   Global market continues to trade near its recent high and remain venerable to any potential negative triggers.

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Global Market – Key events this week 8 to 12 Jan 2024.pdf
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Global Market – U.S. Fed, ECB & BOE meeting outcome – Difference in policy rates

Global Market – U.S. Fed, ECB & BOE meeting outcome – Different interest rate policy

This week, we will discuss U.S Fed, ECB & BOE meeting outcome.  All 3 central banks have kept rate unchanged, but their commentary was different.  We will discuss what is decision by these central banks and how market has reacted to it.

US Fed meeting outcome on 13-Dec-23

• US Fed keeps rate unchanged at 5.25% to 5.50%.
• The Fed statement was extremely on the dovish side.  The U.S. central bank is unlikely to raise rates any further, bringing an end to its most aggressive tightening cycle in decades.
• FOMC members forecast THREE rate cuts in 2024 amounting to 75Bbps worst of policy easing.
• The Fed’s statement said it will assess the extent of ‘ANY’ additional policy firming, adding the word ‘any’.

ECB meeting outcome on 14-Dec-23

• ECB hold key interest rate at 4.50%
• ECB will step up to exit from € 1.7 billion of pandemic era stimulus package.  ECB will accelerate end of reinvestment under the PEPP bond buying program.
• ECB President Christine Lagarde “The risks to economic growth remain tilted to the downside,”.

BOE meeting outcome on 14-Dec-23

• BOE keep rate unchanged at 5.25%.  Interest rate is at 15-years high, borrowing cost to remain high.
• The BOE reiterated its policy will be “sufficiently restrictive for sufficiently long” to curb inflation.

Equichain Wealth Advisors: Market View & Opinion

We would like to highlight that U.S. Fed continues to enjoys the highest impact as far as global interest rate is concern.  ECB & BOE meeting outcome is in contrast with US Fed which has been surprisingly dovish against expectation seen in past few weeks.  We expect global asset class would continue to remain robust and expect year end rally on all major risk-on asset class.  

After underperforming in 2022 and first half of 2023, market are heading towards interesting time in 2024.  US Fed pivot will be “Big turning point” in global market as two major democracies will be going into election, India’s election in April – May 2024 & US election in November 2024.

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Global Market – U.S. Fed, ECB & BOE meeting outcome – Different interest rate policy.pdf
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Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus

Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus

This week, we would focus on economic data CPI & Core CPI inflation data due to be released on 12-Dec-23 ahead of US Fed meeting.  We would focus on economic data released this week and whether this narrative of interest rate peaking will change or not

US Economic data in last week & Upcoming week

Global market continues to trade near its recent high as optimism on interest rate hike cycle may have ended and interest rate would remain at current level from some time and expectation of rate to come down is later in 2024.

Equichain Wealth Advisors: Market View & Opinion

Key data is yet to be released next week, a day ahead of US Fed meeting outcome, we assume that US Fed will be well aware about the trend which will be considered in the US Fed meeting outcome due on 13-Dec-23.  Currently Fed fund rate monitor tool indicate 94.3% probability of rate to remain unchanged on 13-Dec-23.

We remain cautiously optimistic and we are not expecting any surprise in US Fed decision or any big movement in any of the asset classes as reaction to US Fed meeting outcome.  We expect US Fed to keeps interest rate unchanged and commentary of US Fed chair Jerome Powell will be important

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Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus.pdf
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Global Market – Trading at 2023 high & Economic data in focus

Global Market – Trading at 2023 high & Economic data in focus

This week we will discuss how global equity market which either have made fresh high for 2023 and trading near to highest level and market is now factoring in pause by all major central banks.  Today we will also focus on the economic data of U.S. which will be released ahead of U.S. Fed meeting outcome on 13-Dec-23.

U.S. Economic data

We would focus on jobs data which will be released in next week on 5th, 6th & 7th December 2023.  Jobs data have been robust and continue key factor for U.S. Fed to keep interest rate at elevated level.

Global Market – Rallied around 5% – 7% on major indices

Here we would like to highlight U.S. market which has rallied in range of 5% to 7% on major indices.  European stocks where DAX has rallied by around 7% & CAC by less than 4%.  Indian market in last 1 month has rallied by around 6%.

Equichain Wealth Advisors: Market View & Opinion

We have mentioned last week that we are optimistic and we maintain our positive view.  Market will now focus on upcoming economic data and central banks meeting starting from next week.  Any confirmation of pause by major central banks will be taken as positive.  After current rally, we see market evenly balance to react to any outcome, but in case of any disappointment correction in global market could be painful.  

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Global Market – Trading at 2023 high & Economic data in focus.pdf
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Global Market – Whether U.S. Fed will manage “Soft Landing”?

Global Market – Whether US Fed will manage to get “Soft Landing”?

This week we will discuss that whether US fed will manage to get “Soft Landing” of economy.  Here by we mean by “Soft Landing” is that inflation gets under control without any major downturn in economy.  U.S. economic data released so far in the month of August 2023 indicates mix view.

U.S. economic data from 1-Aug-23 to 11-Aug-23

Jobs data released in the month of August 2023 indicate stable number with no major surprises, neither positive nor negative.  U.S. Inflation data released on 10-Aug-23 came at 3.20% Vs estimate of 3.30%.  PPI & Core PPI data released on 11-Aug-23 came above estimate. 

What is “Soft Landing” of economy?

“Soft Landing” of economy here means that inflation comes under control without any major economic shock or recession.  U.S. Fed ‘s objective is to keep inflation target at 2% for long term and optimum employment, which usually can be referred to as stable economy with steady growth.

Equichain Wealth Advisors: Market View & Opinion

Current economic data from U.S. indicates mix picture and we see this as long-term positive development for U.S. economic and global stability.  We also expect some softness in economic activity and expect market to correction in next 1 – 2 months.

Looking at the data mentioned in table above, we believe this set of data does indicate moderation in economic activity at slow pace, which we assume as high probability of “Soft Landing”.   

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Global Market – Whether US Fed will manage to get “Soft Landing”?.pdf
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Global Market – Fitch downgrades U.S. rating to AA+ from AAA

Global Market – Fitch downgrades U.S. rating to AA+ from AAA

This week we will discus the decision by Fitch, a rating agency which downgrade U.S. rating from AAA to AA+ as budget deficit increases.  China may continue to support economy and provide stimulus package to aid recovery and we will discuss BOE policy outcome as it raises rates by 25-bps to 5.25%.

U.S. rating downgrade by FITCH

U.S. sovereign credit rating was downgraded to AA+ from AAA, 1 notch down from AAA rating which highest rating by FITCH.  The rating downgrade expects the fiscal deterioration over next three years on concern of growing general government debt burden and erosion of governance.

BOE Raises Rates to 5.25%

The UK central bank lifted its key rate a quarter point to 5.25% on Thursday, which was in line with market expectations after a surprise half-point increase in June. Still, signs of debate between policymakers prompted traders to pare bets on the pace of further hikes, with markets priced in for rates to peak below 5.75% in February.

China expected to cut Bank’s RRR to boost economy

That’s according to several analysts who’ve pointed to the mounting value of policy loans maturing this month and through the rest of the year as reason for the People’s Bank of China to unleash more liquidity.

Equichain Wealth Advisors: Market View & Opinion

Interest rate at current level is high compared to 2006 – 07 period which was followed by 2008 economic crisis.  Interest rate hike seen from March 2022 was steepest rate hike in recent history and is yet to show its impact on economic activity.

Globally equity market is trading near its recent high, commodities are trading at lower level compared to post Russia-Ukraine crisis increase in prices.  Global financial have not factored in any of the risk which can arise out of high interest rate and rating downgrade for U.S. or any other develop economies.  

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Global Market – Fitch downgrades U.S. ratings to AA+ from AAA.pdf
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Global Market – U.S. Fed meeting outcome & BOJ Policy outcome

Global Market – U.S. Fed meeting outcome & BOJ Policy outcome

This week we will discuss U.S. Fed meeting & Bank of Japan policy outcome.  U.S. Fed increase rate by 25-bps to 5.25% to 5.50% is highest in 22 years and further tightening not ruled out.  Bank of Japan continue to maintain ultra-low interest policy and continue with its QE and manage JGB yield between -0.50% to 0.50%.

U.S. Fed hike rate to 22-year high, keeps door open for further rate hike

The Federal Reserve resumed raising interest rates and Chair Jerome Powell left open the possibility of further hikes, which he emphasized will depend on incoming data that has recently signaled a resilient US economy.

Bank of Japan policy decision outcome

The key move that jolted markets was the BOJ’s switch to a more flexible approach on bond buying. The bank turned its heavily defended yield cap into little more than a yardstick. The BOJ will now allow movements beyond 0.5%, further diluting the meaning of a 0% target aimed at stimulating the economy and prices.

Equichain Wealth Advisors: Market View & Opinion

Global market continues to focus on U.S. Fed and BOJ which are currently adopting contrarian policy approach.  U.S. Fed continue to raise rates and keep door open for further rate hike while BOJ keeps rate ultra-low and but however, they may allow JGB yield to move up to 1%.

We would continue to focus where we see risk arising out of tight monitory policy.  Globally inflation seen softening.  Global monitory policy shift to downward trajectory will provide fresh trigger to risk-on sentiment whereas further tightening would lead to risk-off.

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Global Market – U.S. Fed meeting outcome & BOJ policy outcome.pdf
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