On Wednesday, the week’s biggest event will be the minutes of the Federal Reserve’s meeting. The focus will be on the Fed’s assessment of the state of the ECONOMY and prospects for recovery, as well as its assessment of monetary policy. As the S&P 500 was confirmed to have entered the epidemic bull market, spot gold broke through the $2,000 barrier again, and the dollar’s decline was hardly ending at the 92 level. In addition, markets still need to be alert to sudden news about the situation between China and the US, after US President Donald Trump revealed that he had postponed talks with China and did not want to talk to China now.
Fed minutes hit the market.
Investors are keeping a close eye on the Minutes of the Federal Reserve’s July monetary policy meeting, due to be released at 02:00 Beijing time on Thursday.
Since March, in response to the negative impact of coVID-19 on the US economy, the Fed has cut interest rates to near zero and launched “unlimited” quantitative easing, injecting massive amounts of liquidity into the market.
Given the impasse over us fiscal stimulus, markets expect the Fed to adopt more modest forward guidance and even use yield curve control. At the same time, the Fed has already started to discuss the “average inflation target”, and the market will take its cue from the possibility of further stimulus in the short term.
For the Fed, pushing inflation to its 2 per cent target is a key goal of its monetary policy. However, even before the COVID-19 outbreak, the Fed had not achieved this policy goal. While inflation has picked up since the outbreak hit demand, it is still far from target. The minutes were widely expected to shed more light on the process and timing of the Fed’s review of its monetary policy framework.
Td securities, said the fed on 7 month for resolution without taking any new policy action, statement of interest rate adjustment is extremely weak, although Powell, chairman of the federal reserve did not provide any major review or prospective guide details, but it does suggest that this review will be completed soon, investors hope the fed meeting to discuss progress to provide more information for these
Fed Chairman Colin Powell and other Fed officials will complete the first-ever review of the two-pillar goal of monetary policy by 2020. The review process began in early 2019 and included a nationwide “Fed Listening” tour. Now they are about to publish the results, possibly as early as September.
“It will send a clear signal to the market that the Fed will not only tolerate inflation above 2 percent for the time being, but will support it and will work in that direction,” said Mickey Levy, chief economist at Berenberg Capital Markets in Asia.
Several other economists interviewed made exactly the same prediction and agreed that many Fed officials have been pursuing this strategy for months. Investors are expecting the same.
The U.S. “The rise in inflation expectations is partly a sign that the market is starting to anticipate a fed shift,” said Bill Merz, senior portfolio strategist and head of fixed income research at Bank Wealth Management in New York.
More details about when and how the Fed will complete its review may be revealed this week in the minutes of the Fed’s July 28-29 Federal Open Market Committee meeting. Changes in the way the Fed controls inflation may sound trivial, but they are significant.
AxiCorp market strategist Stephen Innes noted that the market is focused on the Fed’s view on controlling the yield curve, as well as its view on inflation, which is bad for the dollar and good for gold. “The Fed minutes will be a key factor in whether gold can sustain the $2,000 an ounce level.”
Spot gold continued to trade in a tight range around the $2,000 mark in Asian trading on Wednesday, after surging as high as $2,015 yesterday, as the market waited for the Fed minutes.
“People are looking at the DOLLAR index,” said Phillip Streible, chief market strategist at Blue Line Futures. “The extent of the collapse is quite worrying, and we are seeing hard assets like gold and silver rising in sync. “We are back to record highs, the gold market has made a healthy correction and many gold bears will eventually reverse their bets.”
Standard Chartered said last week’s sell-off in the gold market had not affected the metal’s long-term upward trend and that key factors such as the dollar and low interest rates would continue to drive prices higher. “While this is the biggest correction since April 2013, gold remains bullish for the long term.”
Frank Holmes, CHIEF executive of US Global Investors, said: “The long-term fundamentals of gold are very bullish because the whole world has changed. “The reasons behind all the bearish views on gold don’t stand up to scrutiny.”
Be alert to new information on the situation between China and the United States
Aside from the Fed minutes later in the day, markets remained on alert for any sudden news on the U.S. and China situation after U.S. President Donald Trump revealed the reasons for the delay of the weekend meeting.
Mr Trump said it was his decision to postpone a meeting between China and the US scheduled for Saturday to review progress on the first phase of their trade agreement because he did not want to talk to China now.
Trump made the comments Tuesday as he arrived in Arizona for an event and responded to questions from reporters.
Asked at the event if he would withdraw from the agreement, Mr Trump said “We’ll see”.
Chinese and U.S. trade officials had been scheduled to hold a video conference on Aug. 15 to discuss the outcome of the first phase of the trade agreement between the two countries, but the abrupt postponement was announced just before the talks began. At the time, both sides said the meeting had been postponed because of technical procedural considerations.
The US Department of Agriculture said on Tuesday that Chinese buyers had agreed to buy 195,000 tonnes of US corn. China is struggling with soaring domestic corn prices.
TikTok, the overseas version of Douyin, has been one of the eye of the storm in the recent tension between China and the United States.
Mr Trump has signed an executive order requiring TikTok parent Bytedance to sell its US operations within 90 days. A number of companies have expressed interest in acquiring TikTok’s operations in North America, Australia and New Zealand, including Microsoft, Twitter and Oracle.
Speaking at the same event, Mr. Trump said Oracle was a good company and thought it could get TikTok’s business in the US. He also stressed that Bytedance should receive some of the proceeds from selling TikTok’s assets.