Tag: The Federal Reserve

Hedge Your Dollars With Pounds?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


Which currency is set to outperform? Is it the US Dollar or the Pound Sterling? Consider if you will that, despite some notable headwinds, the Fed is moving closer to a rate hike. For many, that suggests the Dollar as the best bet for the next 12 months. Especially with unemployment at 5.3% and core CPI now rebounding to 1.8% Year on Year. Yet some US data releases are still only "mildly" positive; for example gains in wages, slowed from 2.3% to just 2%.

On the other side of the Atlantic the Bank of England has signaled that it's warming up towards a rate hike, too. Yet, unlike in the US, gains in wages have been rising by 3.2% Year on Year. Moreover, GDP has been growing at a pace of 0.4% (QoQ) in Q1, far better than the negative figure posted by the US. So is the Sterling looking better than the Dollar? Not exactly. Then is the Dollar looking better than Sterling? The answer is, once again, not exactly. But here's the thing. Continue reading "Hedge Your Dollars With Pounds?" →

Slip Slidin' Away

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


The Federal Reserve's interest rate liftoff schedule for this year is slowly but surely slip slidin' away, like a space launch aborted by bad weather. It makes you wonder which government agency is directing U.S. monetary policy, the Fed or NASA.

The minutes of the Fed's June 16-17 monetary policy committee meeting released July 8 were a lot more dovish than the announcement that immediately followed the meeting. It now looks like a September rate liftoff isn't as baked in the cake as many previously believed just a few weeks ago.

Since then, of course, a lot has changed, almost all of it conspiring against an early rate increase. September is a lot less likely to happen now, and even December looks doubtful. I didn't think the Fed was courageous or confident enough to make a move this year anyway, so the events of the past few weeks make me more comfortable with that position. Continue reading "Slip Slidin' Away" →

I'm Still Not Sold On A 2015 Rate Increase

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


The consensus market opinion after last week's Federal Reserve monetary policy meeting is that the Fed will start to raise short-term interest rates sometime this year, maybe twice, beginning most likely at its September meeting.

I, for one, am still not sold that that will happen.

Last Wednesday's announcement following the Federal Open Market Committee meeting said not much of anything, especially when it came to signaling when it might finally begin interest rate lift-off. The statement gave the usual yadda yadda that economic activity "has been expanding moderately" and that "the pace of job gains picked up." But nothing about rates, other than the usual verbiage that the current federal funds target range of zero to 0.25% "remains appropriate."

Instead, analysts, journalists and investors were forced to look for clues in the "Fed dots," which show graphically where the 17 individual FOMC members expect interest rates to be by the end of this year, next year, 2017 and beyond. Continue reading "I'm Still Not Sold On A 2015 Rate Increase" →

Yen Spike: An Opportunity in the Making?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


The BOJ Governor, Haruhiko Kuroda, never disappoints when it comes to producing a juicy headline for the newswires. Last time, if you will recall, it was the surprise addition of new stimulus. This time around, in his speech to the Shūgiin, Japan's House of Representatives last week, Governor Kuroda exclaimed that "the Yen is fairly valued." He then continued to outline how the merits of monetary policy have limits.

And what was investors take on Kuroda's message? Clearly fearful. That was evident by the avalanche of investors who failed to consider the underlying message and quickly switched to crowded Yen buying. The USD/JPY move was brutal, with the pair taking a nose dive of 300 pips. Of course, soon after, analysts and experts provided their own take. Opinions ran from "The remarkable rise of the USD/JPY has finally come to an abrupt end" to "the BOJ will not add more stimulus." In fact, big bets on more and more stimulus are now well off the table. But, before you decide to follow the crowd, take a moment to stop, ponder and try to see this for what it very well may be. Simply put, perhaps the spike in the Yen's value is actually an opportunity to sell it high.

Kuroda Vs Bernanke

Markets are looking at Kuroda's speech as the BOJ saying, essentially, that shorting the Yen from here on out might not be such a good idea. It might also suggest that if the BOJ is pleased with the current value of the Yen, that they might then be less accommodative. Of course, no one knows what exactly goes through the governor's head except Kuroda himself, yet we can speculate. Before I do that, let me first draw a comparison to another central banker, Ben Bernanke, the now retired chairman of the Federal Reserve Bank. Continue reading "Yen Spike: An Opportunity in the Making?" →

The Only Place To Find Safe Yields

Posted on by admin

By: Joseph Hogue of Street Authority

The great bond exodus may have begun. Fears of Federal Reserve-induced interest rate increases are pushing bond yields up and bond prices down.

In fact, more than $1.2 trillion in value has been wiped out in the global bond market since April.

The selloff has accelerated when the June employment report showed that wages in May increased by the most since August 2013.

Signs of an economic recovery in Europe have also pushed losses on global bonds even further. The yield on the German 10-year bund has jumped nearly ten-fold since late April. Continue reading "The Only Place To Find Safe Yields" →