Guggenheim’s Minerd says aggressive Fed moves can delay recession, but not avoid it


FILE PHOTO: Scott Minerd, Chairman of Guggenheim Investments and Global Chief Investment Officer, speaks during the Reuters Global Investment 2019 Outlook Summit, in New York, U.S., November 12, 2018. REUTERS/Brendan McDermid/File Photo

NEW YORK (Reuters) – Guggenheim Partners global chief investment officer Scott Minerd warned on Tuesday the firm’s recession forecast model showed a 58% chance of the economy being in a recession by mid-2020, and a 77% chance of one beginning in the next 24 months.

Minerd, who oversees more than $240 billion in assets under management, said history shows that once Guggenheim’s Recession Probability Model reaches current levels, “aggressive policy action can delay recession, but not avoid it.”

Minerd, in a research note to clients, said Guggenheim expects the Trump administration will continue to use easier monetary policy as a “green light for more aggressive trade policy.”

He noted that Federal Reserve Chairman Jerome Powell explicitly cited trade policy as a rationale for cutting rates, which risks the development of a feedback loop between Fed rate cuts and trade war escalation.

Economists widely expect the U.S. central bank to cut its benchmark rate for the second time this year by 25 basis points to a range of 1.75% to 2.00% at a meeting ending Wednesday to counter risks posed by the U.S.-China trade war.

“If core inflation heads back up toward 2%, some Fed officials may more forcefully resist further rate cuts, complicating an already difficult messaging exercise,” Minerd said.

“Incoming data support our longstanding baseline of a recession beginning by mid-2020, per our Recession Dashboard. Given that credit spreads are still relatively tight on a historical basis, we continue to believe it is prudent to remain up in quality as we await better opportunities to deploy capital in riskier credit sectors in the coming downturn.”

Minerd said investors should keep a close eye on the stock market and the shape of the yield curve.

“Stock market response will be a key indicator of the success of the Fed’s move to cut rates, and if the curve stays inverted the market is signaling its skepticism that Fed policy will keep the economy from falling into recession,” he said.

Editing by Jacqueline Wong



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Gold Prices Slip for Third Day on Signs of Less Aggressive Fed Rate Cuts By Investing.com


© Reuters.

Investing.com – Gold prices fell for a third straight day on the back of signs that the Federal Reserve could be less aggressive in policy easing than markets expect.

for August delivery on the Comex division of the New York Mercantile Exchange, fell $3.95, or 0.3%, to $1,407.25 a troy ounce by 9:04 AM ET (13:04 GMT).

Gold’s biggest decline this week occurred on Tuesday as a stronger-than-expected reading of U.S. retail sales suggested that the Fed may not hurry to ease cut interest rates.

Even though markets are currently pricing the odds of a at 100% for the end of the month, San Francisco Fed President Mary Daly indicated late Tuesday that she still was still .

“At this point I’m not leaning one direction or another, but I am very much oriented toward looking at the data, watching the pieces come out, looking at the preponderance of evidence on mood and behavior and momentum and headwinds,” she said in an interview with Reuters.

However, her colleague Charles Evans, chief of the Chicago Fed, argued that a in order for the central bank to reach its inflation target.

“There is an argument that if I think it takes 50 basis points before the end of the year to get inflation up, then something right away would make that happen sooner,” he said.

Dallas Fed President Robert Kaplan, who had opposed a cut, did recently shift his stance, saying that he now thinks a “tactical” reduction of a quarter point could address the risks seen by bond investors, who have pushed some long-term yields below shorter-term ones.

A strong employment report released at the beginning of the month had appeared to rule out a 50 basis point cut at the July 30-31 meeting, but remarks last week by Fed Chair Jerome Powell have seen some hopes of quick and decisive action from the Fed return.

Fed funds futures now price in a 34.9% chance for a 50 basis point cut at the next meeting.

Gold is sensitive to lower interest rates that reduce the opportunity cost of holding non-yielding bullion.

In other metals trading, rose 0.3% at $15.732 a troy ounce by 9:05 AM ET (13:05 GMT).

advanced 1.5% to $1,539.10 an ounce, while sister metal lost 0.7% to $840.95.

In base metals, traded down 0.3% to $2.692 a pound.

— Reuters contributed to this report.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Dollar steadies as strong U.S. inflation tempers chance of aggressive Fed rate cut By Reuters


© Reuters. Dollar steadies as strong U.S. inflation tempers chance of aggressive Fed rate cut

By Shinichi Saoshiro

TOKYO (Reuters) – The dollar was steady on Friday, having regained some traction against its peers after stronger-than-expected U.S. inflation data tempered the prospect of an aggressive Federal Reserve interest rate cut later this month.

The core U.S. consumer price index excluding food and energy components rose 0.3% in June, the largest increase since January 2018, data on Thursday showed.

The signs of a pick-up in underlying inflation, along with separate data on weekly jobless claims showing the labor market remained solid, curbed financial market expectations of a more aggressive 50 basis point cut at the Fed’s July 30-31 meeting.

Markets are still fully priced for a quarter percentage point cut as U.S. policymakers seek to support a slowing economy.

The dollar was little changed at 108.490 yen after rebounding from a low of 107.860 plumbed on Thursday in response to dovish comments from Fed Chairman Jerome Powell, which had revived the chance of a 50 basis-point cut.

“The dollar bounced back as the strong U.S. CPI got the market to question the Fed’s view on prices and whether inflation was really as weak as projected,” said Takuya Kanda, general manager at Gaitame.Com Research Institute.

“Expectations for a 50 basis point cut had risen after Powell’s comments but were lowered again by the CPI. Until the Fed’s meeting later this month, the prospect of a 50 basis point cut will continue ebbing back and forth on each major data release.”

The () against a basket of six major currencies stood little changed at 97.081 after retracing much of its losses on Thursday, when it had briefly stooped to a six-day low of 96.795.

The euro () was flat at $1.1254, having pulled back from a high of $1.1285 scaled on Thursday prior to the U.S. inflation data..

The Australian dollar dipped 0.05% to $0.6972 after gaining 0.2% the previous day.

The U.S. Treasury 10-year yield (), which often dictates the direction of the dollar, was at 2.134% after jumping 8 basis points overnight on the strong U.S. inflation data and a weak 30-year bond auction.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Aggressive U.S. energy policy tests ties with European allies


WASHINGTON/BRUSSELS (Reuters) – For the administration of President Donald Trump, a policy of “energy dominance” means reducing dependence on imported oil and promoting exports to boost the national economy and Washington’s political influence overseas.

FILE PHOTO: U.S. President Donald Trump talks with Energy Secretary Rick Perry after delivering remarks during an “Unleashing American Energy” event at the Department of Energy in Washington, U.S., June 29, 2017. REUTERS/Carlos Barria/File Photo

For many of America’s European allies, however, it means unwelcome interference in its markets.

The Trump administration has capitalized on a decade-long U.S. drilling boom to pursue some of the most aggressive foreign energy policies in the nation’s history. So far, that has meant sanctions on oil exports from OPEC-members Iran and Venezuela and threats against firms helping Russia build a natural gas pipeline into Europe.

To fill the supply gap, Washington is promoting a rising wave of U.S. crude oil and natural gas exports.

The Trump administration has billed the moves as a way to achieve foreign policy goals, with the added benefit of helping both U.S. energy producers expand their markets and American allies diversify their supplies. But Washington has irritated many European diplomats and energy companies who resent its growing global influence on energy markets and view its policies mainly as a way to give U.S. producers an advantage, according to interviews with diplomats, executives and analysts.

Growing friction over energy is grating on trans-Atlantic ties that are already strained by squabbles over NATO funding, trade, climate change and diplomatic gaffes.

“We value highly the relationship with our American partners, allies and friends,” EU Economics Commissioner Pierre Moscovici told reporters at a briefing in Brussels last month. “But … they should also refrain from unilateral action.”

Moscovici also advocated using the euro in more international energy transactions, which are almost universally conducted in U.S. dollars.

“We are all about the diplomacy, but you have to ask at some point whether it is worth it,” said another EU diplomat, who asked not to be named.

The diplomat spoke to Reuters at a U.S. embassy party attended by U.S. Energy Secretary Rick Perry in Brussels in June, where a handful of other European diplomats were sharing gripes about what they saw as Trump’s brash, go-it-alone approach on energy.

A senior Trump administration official, speaking on condition of anonymity, said the energy strategy aims at the mutual benefit of the United States and its allies.

“What the U.S. energy sector is doing is unleashing our energy resources and our technologies and sharing them with our partners and allies around the world to help them diversify their energy mix and ensure reliable supply,” said the official.

A Department of Energy press release recently called U.S. gas exports to Europe a way to spread “molecules of freedom” across the Atlantic.

The United States has become the world’s top oil producer and is on a path to become the world’s third largest exporter of natural gas, thanks to a technology-led drilling boom that the Trump administration has sought to boost by slashing environmental regulations.

The United States sent of 43.3 million barrels of crude oil and products to Europe in the six months ended in March, a 27 percent increase from the same period a year earlier, according to the Energy Information Administration. Meanwhile, U.S. liquefied natural gas exports to Europe have nearly tripled since last year, when the European Commission agreed to buy more in a trade meeting with Trump.

“Increasingly, the America First framework translates into advocating for oil and gas sales around the world,” said Tim Boersma, a senior research scholar at Columbia University’s Center on Global Energy Policy.

EUROPEAN RESISTANCE

The unilateral U.S. sanctions on Iran and Venezuela would have triggered steep oil price increases without the surge in U.S. supply.

Trump’s decision last year to pull out of the Iran nuclear deal – which has evolved into an unprecedented effort to completely block its oil exports – was opposed by Europe’s leaders and reluctantly accepted by its energy companies, who faced U.S. penalties including being excluded from the U.S. financial system.

Germany, France and the UK have since taken steps to resist Washington, including setting up a barter-based trade mechanism called Instex that would allow it to trade with Iran outside the U.S. financial system in a way that skirts U.S. sanctions. Europe hopes to use Instex to allow Iran to exchange its oil and gas or other goods for medicine, food or other humanitarian supplies from the EU.

“They have sovereignty and self-respect at issue here. They’re trying to say we’re going to do Iran trade; we’re going save the nuclear deal and provide a mechanism; and we don’t appreciate being unilaterally dictated to,” said Sanjay Mullick, a sanctions lawyer at Kirkland & Ellis LLP.

SQUABBLES OVER SANCTIONS

Meanwhile, British-and Swiss-based trading houses and refineries have received insistent calls from U.S. State Department officials warning about trading oil products with sanctioned countries.

Last month, for example, Mark Saavedra, a State Department official at the bureau of energy resources, called several European energy trading houses to instruct them not to trade jet fuel with Venezuela, a product that was not specifically on the U.S. sanctions list for that country, according to three industry sources familiar with the calls.

The U.S. has been trying to block shipments of refined fuels to the Latin American country to prevent it from blending it with its heavy crude oil to make it more suitable for export, part of an effort to ratchet up pressure on socialist President Nicolas Maduro.

The sources said the trading houses believed the State Department had overstepped its authority.

Frank Fannon, the U.S. Assistant Secretary of State for Energy Resources, said don’t expect State to put down the phone anytime soon. Such requests, he said, are a friendly way to tell allies how to avoid sanctions themselves.

“It may be unwelcome news, but it’s important that we convey that clearly and unequivocally,” Fannon said.

FIGHTING A RUSSIAN PIPELINE

Trump has also hurled criticism at European nations for supporting a long-planned, multi-billion-dollar Russian gas pipeline to Germany, the Nord Stream 2, saying it would give Moscow too much influence over Europe’s biggest economy and threatening to sanction companies that help the project.

That’s rubbed some EU diplomats and companies the wrong way.

“It will be a disaster for Europe to ditch Nord Stream 2 under U.S. pressure,” said Rainer Seele, CEO of energy company OMV Austria’s largest company and one of five European companies including France’s Engie helping to finance Nord Stream 2.

The Russian gas via pipeline is cheaper than U.S. liquid natural gas, he said, and U.S. pressure threatens “Europe’s independence and security of energy supplies.”

Some countries such as Poland and Lithuania, however, are happy to buy the incoming U.S. liquefied natural gas shipments to help break reliance and barter better prices from Russian gas export monopoly Gazprom.

FILE PHOTO: A horizontal drilling rig on a lease owned by Parsley Energy operates at sunrise in the Permian Basin near Midland, Texas U.S. August 24, 2018. Picture taken August 24, 2018. REUTERS/Nick Oxford/File Photo/File Photo

On June 12, Polish Oil and Gas Company (PGNiG) signed an agreement with U.S. company Venture Global LNG to buy 1.5 million metric tons of LNG a year.

But even diplomats opposed to Nord Stream 2 take issue with Washington’s tone and tenor, according to the Reuters interviews.

“We don’t want to be dictated to,” said one.

Reporting by Timothy Gardner; Additional reporting by Alissa de Carbonnel in Brussels, Dmitry Zhdannikov in London and Humeyra Pamuk in Washington Editing by Richard Valdmanis and Brian Thevenot



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Asian stocks hobbled by fading expectations for aggressive Fed rate cut By Reuters


© Reuters. Passerbys walk past an electric screen showing Asian markets indices outside a brokerage in Tokyo

By Hideyuki Sano and Noah Sin

TOKYO/HONG KONG (Reuters) – Asian stocks fell to their lowest levels in two and a half weeks on Tuesday as hopes dwindled for a hefty interest rate cut by the U.S. Federal Reserve at the end of the month, while technology companies were pulled lower by Apple (NASDAQ:) Inc’s overnight slump.

Investors have rushed to scale back Fed rate cut expectations following unexpectedly strong gains in U.S. jobs for June, with U.S. stock markets falling for a second straight day.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5% to its lowest since June 20.

Japan’s slipped 0.1%.

In China, the and the blue-chip CSI300 were both 0.6% lower, while Hong Kong’s fell 0.8%.

Australian stocks fell 0.4% and the Korean market was 0.3% lower.

On Wall Street, the lost 0.48% while the dropped 0.78%, led by fall in Apple after a brokerage downgraded the stock to “sell”. ()

Apple’s suppliers in Japan, such as Murata Manufacturing and Taiyo Yuden, fell 2.1% to 3.4%. In Greater China, suppliers from Hon Hai to AAC Tech lost between 1.3% and 2.8%.

Money market futures are still fully pricing in a 25 basis point (bps) cut at the Fed’s next policy meeting on July 30-31, but have almost priced out a larger 50 bps reduction.

“The headline payrolls figures was pretty strong but wages were tepid, so on the whole a 25 basis-point cut would be justified as an pre-emptive move and I think the current market pricing is fair,” said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

Global equities will likely remain under pressure after last month’s outperformance, Pictet Wealth Management said in a memo on Tuesday.

“After a strong rally in June that more than erased the May drawdown, valuations look demanding, underpinning our underweight stance,” the firm said. “We expect (emerging market) equities to perform sideways in the coming weeks, but with the possibility of rotation to quality cyclicals.”

Investors’ focus is shifting to Fed Chairman Jerome Powell’s testimony before Congress later in the week for clues on monetary policy.

“What the market will be looking for is whether the language is as dovish as previously (at last policy meeting),” said Christy Tan, head of market strategy for Asia at National Australia Bank. “There’s been some over-dovishness in what the Fed needs to do in the market.”

DOLLAR STRENGTH

In the currency market, fading Fed cut expectations helped the dollar. [FRX/]

The euro traded at $1.1213, near Monday’s low of $1.1207, its weakest level since June 19.

The dollar changed hands at 108.75 yen, having risen up to 108.81 yen in the previous session, its highest in more than a month.

The versus a basket of six major currencies was little changed at 97.374.

The British pound stood at 1.2508, not far from six-month lows of $1.2481 touched on Friday.

Oil prices were slightly softer as concerns about whether slowing global economic growth would hit oil demand eclipsed tensions over Iran’s nuclear programme.

futures fell 0.4% to $63.87 a barrel. U.S. West Texas Intermediate (WTI) crude futures shed 0.42% to $57.42.



Dollar regains footing as bets on aggressive U.S. rate cuts fade By Reuters



By Stanley White

TOKYO (Reuters) – The dollar traded near a three-week high on Tuesday against its peers, as investors reduced bets on aggressive U.S. interest rate cuts ahead of the Federal Reserve chairman’s testimony to Congress on the economy.

Sterling was pinned near a six-month low versus the dollar on speculation the Bank of England will soon join other major central banks in easing monetary policy in response to growing worries about the global economy and Britain’s exit from the European Union.

Fed chief Jerome Powell’s comments in two-day testimony to Congress beginning on Wednesday will be closely watched to determine whether traders will continue to pare bets for deep interest rate cuts, which could help the dollar continue its rebound against major currencies.

“The dollar is bouncing back, so there are some downside risks for the euro and cable,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

“There is a risk the Fed will not be as dovish as people thought. Central banks ahead of the curve in this cycle are Australia and New Zealand. The Fed is following, but the European Central Bank and the Bank of England are laggards.”

The () versus a basket of six major currencies was little changed at 97.374 on Tuesday, which was close to a three-week high of 97.443 hit on Friday.

The greenback was steady at 108.75 yen , near a six-week high of 108.81 yen reached on Monday.

Investors will closely analyze Powell’s comments when he delivers his semi-annual monetary report before Congress to gauge how far the U.S. central bank will lower interest rates.

A sharp rebound in U.S. job growth in June reduced expectations that the Fed will cut interest rates by 50 basis points when it meets at the end of July.

A week ago, the market forecast an 80.1% chance of a 25-basis-point cut, and a 19.9% chance of a 50-basis-point cut, according to CME Group’s FedWatch tool. The chances are now 98% and 2%, respectively.

The British pound was last quoted at $1.2515, within striking distance of $1.2481, its lowest since the “flash crash” on January 3 when the pound dropped to $1.2409.

Data on UK gross domestic product and industrial output are due Wednesday, while the Bank of England will release its financial stability report on Thursday, which could help traders gauge whether the BoE will take a more dovish view of the economy.

The euro () traded at $1.1216, near a three-week low of $1.1207.

The Turkish lira was steady in early trade in Asia after weakening sharply following President Tayyip Erdogan’s dismissal over the weekend of the central bank governor, sparking worries about the bank’s independence.

The lira at one point slid to a two-week low of 5.8245 to the dollar and was last quoted at 5.7291.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Wall St. set to open lower as aggressive rate cut hopes recede By Reuters


© Reuters. Traders work on the floor at the NYSE in New York

(Reuters) – U.S. stocks fell at the open on Monday as Apple Inc (NASDAQ:) shares dropped and investors scaled back bets of an aggressive interest rate cut by the Federal Reserve later this month following a solid June jobs report.

The Dow Jones Industrial Average () fell 86.48 points, or 0.32%, at the open to 26,835.64.

The S&P 500 () opened lower by 10.64 points, or 0.36%, at 2,979.77. The Nasdaq Composite () dropped 48.88 points, or 0.60%, to 8,112.91 at the opening bell.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Asean stocks fall as strong US jobs data softens aggressive rate-cut hopes – Business News



SINGAPORE: Southeast Asian stock markets fell on Monday, with Singapore shedding 1%, as strong US jobs data for June tempered hopes of sharp rate cuts by the US Federal Reserve.

US government employment in June grew the most in 10 months, as overall non-farm payrolls increased by 224,000 jobs. In contrast, only 72,000 jobs were added in May.
    
After the strong payrolls report, there are some concerns that Fed Chair Jerome Powell may not be as aggressive as the market had expected on rate cuts, said Stephen Innes, managing partner at Vanguard Markets, in a note to clients.
    
Hopes of sharp rate cuts by the Fed in the face of stumbling economic data, especially under the weight of multiple tariff tiffs that the United States has been involved in, have helped markets retain their sheen over the last few months.

Morgan Stanley’s decision to reduce its global equities exposure also soured investor mood. 

“The market is too optimistic on 2019 earnings and is underestimating the pressure from inventories, labour costs and trade uncertainty,” Morgan Stanley said in a research note.

Singapore stocks fell the most in Southeast Asia, weighed down by industrials and financials. The benchmark stock index logged its biggest percentage drop in almost two months.

Conglomerate Jardine Matheson Holdings Ltd dropped 1.5%, while lender DBS Group Holdings Ltd lost 1%.
    
Philippine shares ended 0.8% lower, with index heavyweights SM Prime Holdings Inc and SM Investments Corp shedding 1.2% and 2.3%.
    
Indonesian shares lost 0.3%, dragged by consumer and financial stocks. 
    
Cigarette maker PT Hanjaya Mandala Sampoerna Tbk was down 2.8%, while lender Bank Central Asia Tbk PT ended 1.5% lower.
    
Thai shares closed flat after the central bank chief expressed confidence in the economy.
    
The economy’s relative strength in comparison to peers in the region has driven strong capital inflows so far this year. 
    
Foreign investors have purchased a net $1.69 billion worth of Thai equities so far this year. – Reuters

 





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‘Aggressive’ Central Banks Making Bitcoin More Attractive By Cointelegraph


© Reuters. Deutsche Bank: ‘Aggressive’ Central Banks Making Bitcoin More Attractive

The potential interest rate cut by the United States central bank is apparently one of the reasons for the recent surge of bitcoin (BTC), Deutsche Bank (DE:) exec Jim Reid said in an interview with CNBC on June 26.

Reid, the head of global fundamental credit strategy at Deutsche Bank, stated:

Continue Reading on Coin Telegraph

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Asia stocks dip after Fed tapers aggressive easing expectations – Business News


TOKYO: Asian stocks dipped on Wednesday and the dollar inched up from three-month lows after Federal Reserve officials tempered expectations in the markets for aggressive monetary easing.

In early European trade, the pan-region Euro Stoxx 50 futures were down 0.29%, German DAX futures lost 0.31% and Britain’s FTSE futures slipped 0.26%.

Fed Chair Jerome Powell on Tuesday said the central bank is “insulated from short-term political pressures,” pushing back against U.S. President Donald Trump’s demand for a significant rate cut.

Powell, however, said Fed policymakers are wrestling with questions on whether uncertainties around U.S. tariffs, Washington’s conflicts with trading partners and tame inflation require a rate cut.

Separately, St. Louis Fed President James Bullard told Bloomberg Television he does not think the U.S. economy is dire enough to warrant a 50-basis-point cut in July, even though he pushed to lower rates last week.

Equity markets have rallied this month, with Wall Street shares advancing to record highs, after the Fed was seen to have opened the door to possible rate cuts as early as next month at is policy-setting meeting last week.

According to latest data from CME Group ’s FedWatch program, federal funds futures implied that traders now see a 27% chance of the Fed lowering rates by half a percentage point in July, compared to 42% on Monday.

Trump said on Twitter on Monday that the Fed “doesn’t know what it is doing,” adding that it “raised rates far too fast” and “blew it” given low inflation and slowing global growth.

MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.15%, tracking overnight losses on Wall Street.

The Shanghai Composite Index edged down 0.25% and Australian stocks dipped 0.1%. Japan’s Nikkei retreated 0.6%.

“While Powell’s comments do not alter expectations that the Fed will ease sooner or later, they do leave a slightly negative impact on equities,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

“The focus is now on the G20 summit. Market expectations for a meaningful breakthrough being achieved in U.S.-China trade talks are quite low, so any signs of an improvement could bode well for risk sentiment.”

The United States hopes to re-launch trade talks with Beijing after Trump and his Chinese counterpart Xi Jinping meet in Japan during the G20 summit on Saturday but Washington will not accept any conditions on tariffs, a senior administration official said on Tuesday.

The two sides could agree not to impose new tariffs as a goodwill gesture to get negotiations going, the official said, but it was unclear if that would happen.

Many G20 members have a stake in the outcome because the row has disrupted global supply chains, slowed world growth and stirred expectations of interest rate cuts or other stimulus measures by some of the group’s central banks.

The dollar index against a basket of six major currencies was up 0.15% at 96.302, extending modest overnight gains.

The index had bounced back from 95.843 on Tuesday, its lowest level since March 21, following comments from the top Fed officials.

The dollar added 0.3% to 107.490 yen after a rebound from a near six-month low of 106.780.

The greenback had sunk to the six-month trough as the yen, a perceived safe haven, had drawn bids in the face of brewing U.S.-Iran tensions.

The euro slipped 0.1% to $1.1353 after being nudged off a three-month peak of $1.1412.

The New Zealand dollar edged higher after the Reserve Bank of New Zealand (RBNZ) stood pat on monetary policy on Thursday, keeping rates at a record low 1.50%. 

But the kiwi’s gains were limited as the central bank expressed concern towards economic risks at home and abroad.

“Overall, today’s announcement provides a strengthened signal that another cut is coming, most likely soon, unless there is a marked improvement in the global outlook,” wrote economists at HSBC.

The kiwi last traded 0.2% higher at $0.6651.

U.S. crude oil futures advanced roughly 2% to touch a four-week high of $59.10 per barrel after data showed a decline in U.S. crude stocks.

The U.S. data helped underpin a crude market already buoyed by worries over potential U.S.-Iran conflict.

Spot gold slipped from a six-year high of $1,438.63 an ounce scaled on Tuesday after the comments from Fed officials trimmed expectations for a rate hike in July.

Gold was down 1% at $1,407.61 an ounce, headed to snap a six-day winning streak. The precious metal was still up 8.5% so far this month. – Reuters





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