BoE hawks lose ground, Yellen in focus
The US investors’ sentiment was hit by news that President Donald Trump’s son exchanged e-mails with Russians and may have a finger in his father’s victory in 2016 election. Political squeezes interfere with the government’s agenda and the fading hopes for Trump's fiscal reforms dent the appetite in the US markets. The US dollar is softer across the board, the US 10-year yields retreat to 2.35% and the US stocks lack momentum.
The Federal Reserve (Fed) Chair Yellen delivers her semiannual testimony in front of the Congress today and Thursday. In her speech, Yellen is expected keep her policy outlook unchanged, which involves one more rate hike before the end of the year and the balance sheet normalisation.
Yesterday, Fed’s Brainard said that the Fed should start reducing the size of its balance sheet ‘soon’. The term ‘soon’ is a source of confusion and provides a window of opportunity for speculation. Lack of further detail on the size and the timing of the Fed’s portfolio unwind could keep the US dollar under pressure.
Fed balance sheet could trigger a domino effect
The Fed's balance sheet normalisation is expected have an impact comparable to less than 25 basis points raise in interest rates. Yet, the message that will be delivered to the market, combined with speculations that the European Central Bank (ECB) will also start considering a form of tapering, should keep the sovereign yields sustained across the G10 money markets.
Click here to read the full article on LCG.com
The US investors’ sentiment was hit by news that President Donald Trump’s son exchanged e-mails with Russians and may have a finger in his father’s victory in 2016 election. Political squeezes interfere with the government’s agenda and the fading hopes for Trump's fiscal reforms dent the appetite in the US markets. The US dollar is softer across the board, the US 10-year yields retreat to 2.35% and the US stocks lack momentum.
The Federal Reserve (Fed) Chair Yellen delivers her semiannual testimony in front of the Congress today and Thursday. In her speech, Yellen is expected keep her policy outlook unchanged, which involves one more rate hike before the end of the year and the balance sheet normalisation.
Yesterday, Fed’s Brainard said that the Fed should start reducing the size of its balance sheet ‘soon’. The term ‘soon’ is a source of confusion and provides a window of opportunity for speculation. Lack of further detail on the size and the timing of the Fed’s portfolio unwind could keep the US dollar under pressure.
Fed balance sheet could trigger a domino effect
The Fed's balance sheet normalisation is expected have an impact comparable to less than 25 basis points raise in interest rates. Yet, the message that will be delivered to the market, combined with speculations that the European Central Bank (ECB) will also start considering a form of tapering, should keep the sovereign yields sustained across the G10 money markets.
Click here to read the full article on LCG.com