No Result
View All Result
  • Login
  • Register
Business & Technology
SUBSCRIBE
  • .
  • Thought Leadership
  • Conversations
  • International Voices
  • News
  • Wealth
  • Digital Transformation
  • Lifestyle
  • Videos
  • Podcasts
  • .
  • Thought Leadership
  • Conversations
  • International Voices
  • News
  • Wealth
  • Digital Transformation
  • Lifestyle
  • Videos
  • Podcasts
No Result
View All Result
Biztech Asia
Home Wealth Management

US Fed pushes back on taper talks

by editorial
13/01/21
in Wealth Management
3 min read
0
US Fed pushes back on taper talks

International market analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi,

The Federal Reserve’s tapering push back is not only a foreshadow of Chair Powell’s speech later this week, but it also repaved the runway for the stimulus reflation trade to fly higher.

We know vaccine means brighter day and blue sky ahead. And with the Fed verbally pushing back against steepeners, once the US presidential inauguration chaos on the Beltway hits the rear-view mirror, investors will start surfing the stimulus wave again.

Stocks and commodities are marching higher, and it’s no coincidence risk is up in Asia after the US dollar is down for the first time in four days.

The drivers are non-toxic – curve steepening too far too fast, and Fed rhetoric but we will soon move past the 30y auction this Thursday.

We are seeing profit-taking and pairing downside risk ahead of CPI later today where the call is lackluster at best but watch out if the big inflation uglies surprisingly rear their heads.

Powell is speaking this Thursday where he may pour some cold water on the narrative around the tapering of purchases – but on the back of FOMC voter Bostic’s where he said he could advocate a normalization in policy as early as mid-2022 if the recovery is faster than expected.

The implied probability for a hike by the end of 2022 has risen from 10% pre-Georgia run-offs to now 35%, which is not unreasonable when you consider the Bank of Canada is priced at 113% probability of a hike by the end of 2022.

Impeachment is a concern for the fiscal stimulus timeline (which will impact the Fed outlook). Still, it may only push things back by a week or two beyond the inauguration to late Jan/early Feb.

BOE on negative rates

Bank of England (BOE) Governor Bailey also went back on negative rates in the UK this morning, helping to drive GBPUSD which also has a bit of a gravitational pull on other G-10.

Meanwhile, Covid continues to drive restrictions in the face of vaccinations, with German Chancellor Angela Merkel warning that Germany may need another ten weeks of lockdowns.

Simultaneously, China has locked-down cities in Hebei and Heilongjiang provinces ahead of the Lunar New Year on Feb 12. It makes us wonder if the world will be dealing back and forth restrictions indefinitely on spikes in Covid that occur even after we achieve “herd immunity.”

CPI is the major focus of the day and given the FOMC pushback on tapering has opened the small door for risk-taking, I would expect investors to walk through it until it slams shut.

Inflation expectations had rallied to the highest since early 2018 when President Trump was cutting corporate taxes into an economic upcycle. At face value, it seems the Feds are prepared to keep real rates in check via its Treasury purchases that absorb any supply the market can’t handle. Indeed, this is the FED current mantra and might be unlikely to change until the virus passes, and a good chunk of the economic damage has been corrected.

For the steepeners to continue, something must give way. Either inflation expectations will need to move back up to levels not seen since before the 2008 financial crisis, or real rates will need to surge, triggered by a hefty Fed taper.

The conjecture is never a pure science, but a taper doesn’t feel likely in this type of economic environment.

Previous Post

Meat-free KFC burger available in Singapore

Next Post

All eyes on the Fed this Thursday

editorial

editorial

Related Posts

Can we automate our way out of the savings crisis?
Wealth Management

Can we automate our way out of the savings crisis?

People’s Bank of China drains liquidity with MLF operation
Wealth Management

People’s Bank of China drains liquidity with MLF operation

US dollar versus rising treasury yields; gold on the defensive
Wealth Management

US dollar versus rising treasury yields; gold on the defensive

Personal Finance Show – Value Investing 101
Wealth Management

Personal Finance Show – Value Investing 101

Chinese tech bloodbath
Daily Show

Money to be made before Christmas

Chinese tech bloodbath
Daily Show

Japanese economy on the mend

Next Post

All eyes on the Fed this Thursday

The dilemma of politics, pandemic and economy in the US and Malaysia

The dilemma of politics, pandemic and economy in the US and Malaysia

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Recommended Stories

Biden’s Presidency: The challenge of national reconciliation and multilateralism

US may want to leave the door open for bilateral trades

US elections – blue wave, good for Asia?

Sanya, the ‘Hawaii of China’, draws local tourists dollars with vengeance

Sanya, the ‘Hawaii of China’, draws local tourists dollars with vengeance

Popular Stories

  • Economic recovery: an elusive thought?

    Economic recovery: an elusive thought?

    0 shares
    Share 0 Tweet 0
  • Cannibalising your business can be profitable

    0 shares
    Share 0 Tweet 0
  • Sexual fulfillment builds confidence and well-being

    0 shares
    Share 0 Tweet 0
  • Tech Stocks – Ant gets stomped on but REITS offer stability amid volatility

    0 shares
    Share 0 Tweet 0
  • Singapore REITS and China tech stocks – Which should you buy?

    0 shares
    Share 0 Tweet 0

About Us

A Business and Technology digital publication that engages business leaders in business and technology conversations to help everyone pivot, adapt, and thrive in these turbulent times.

LEARN MORE »

Contact Us

Phone: 016-2011 050

Email: editor@biztech.asia

Address:
Level 18, Boutique Office 1 (B01-C)
Menara 2, No. 3, Jalan Bangsar,
KL Eco City, 59200, Kuala Lumpur.

Email Newsletter

Loading

© 2020 Business & Technology - made possible by Milestones Digital.

No Result
View All Result
  • Home
  • Thought Leadership
  • Conversations
  • International Voices
  • News
  • Wealth
  • Digital Transformation
  • Lifestyle
  • Videos
  • Podcasts
  • Login
  • Sign Up

© 2020 Business & Technology - made possible by Milestones Digital.

Welcome Back!

Sign In with Facebook
Sign In with Google
OR

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Sign Up with Facebook
Sign Up with Google
OR

Fill the forms bellow to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

will use the information you provide on this form to be in touch with you and to provide updates and marketing.