Morning Brew September 23 2021
Senior Relationship Manager
Summary: Powell keeps the sentiment friendly with minimum taper outlook
The Federal Reserve announced it is looking to reduce its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected. Powell indicated he would taper if the job market in September was reasonably strong, this makes the Non-Farm Payroll on October 8 extremely important.
The first rate hikes is expected in 2022 and more in 2023 and 2024.
Equities took the announcement friendly, the USD initially fell then rose pretty much back to where we started the day. All three US Indexes closed 1% higher and can rise over night, the Dax Future is 15560, the S&P500 Future 4397. EURUSD rose to 1.1755 yesterday and fell to 1.1708, gold and silver are trading at 1765 and 22.62 after highs at 1787 and 23.15 . The USD Index broke below 93 briefly to rise to 93.50 currently trade 93.36. Bitcoin can rise to 43800.
It seems Powel did what was expected to keep his post – he did not spook the market.
Evergrande remains unsettled but the company said it will focus on delivering to home buyers, construction workers and retail investors as a priority and shares can rise off the lows. It is justified to keep a close eye on developments here.
As after the data release is before the release, we expect the focus today to be on the SNB at 9:30, EU Markit PMI at 10, UK PMI at 10:30, the Bank of England at 13:00 at the same time as the Central Bank of Turkey, Initial Jobless claims out of the US at 14:30 and the US PMI at 15:45.
Lastly the German election is due on Sunday and it looks like change is coming, but many voters remain undecided
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.