Williams Says Fed’s Era of Market Hand-Holding Nearing an End
It’s almost time for the Federal Reserve to stop holding the market’s hand.
That’s the message from John Williams, president of the Federal Reserve Bank of San Francisco, who takes the helm of the central bank’s powerful New York branch on June 18. In an interview on Tuesday, he said he thinks the time is approaching to phase out forward guidance — the nearly decade-old practice of pledging continued easy monetary policy. The strategy was used to calm investors in the depths of the financial crisis, and the Fed continues to say rates will remain below levels likely to prevail over the longer run, even as it lifts borrowing costs to prevent overheating. “We can’t keep talking about policy normalization once we’re around what we think of as a neutral interest rate,” Williams said in Minneapolis, referring to the level of interest rates that neither slows nor speeds up the economy. “So I think this forward guidance, at some point, will be past its shelf life.” Read More @ https://www.bloombergquint.com/global-economics/2018/05/16/williams-says-fed-s-era-of-market-hand-holding-nearing-an-end#gs.jkSy3Yo
Asian Markets Mostly Lower On Rising U.S. Bond Yields, Geopolitical Tensions
Asian stock markets are mostly lower on Wednesday following the negative cues from Wall Street amid worries about rising U.S. Treasury yields. News that North Korea has abruptly cancelled high-level talks with South Korea slated for Wednesday and also threatened to pull out of a planned summit with the U.S. further dampened investor sentiment. The Australian market is rising, shrugging off the negative cues from Wall Street. Mining and energy stocks are among the leading gainers following a rise in oil prices and as commodity prices held firm. Read More @ http://www.rttnews.com/2895615/asian-markets-mostly-lower-on-rising-u-s-bond-yields-geopolitical-tensions.aspx?type=glcom
Italian Bond Futures, Euro Climb As Italian Coalition Agreement Reached – long term EURO still a good buy not for now.
The culmination of months of negotiations between the anti-immigrant Northern League and the anti-establishment Five Star Movement has arrived Wednesday afternoon in the form of a forty page comprehensive policy agreement reached between the two parties, according to Ansa, the Italian newswire. Northern League Deputy Claudio Borghi confirmed in a tweet that negotiations have produced an agreement that must now be approved by party leaders Matteo Salvini, who represents the Northern League, and Luigi di Maio, who represents the Five Star Movement. Read More @ https://www.zerohedge.com/news/2018-05-16/italian-bond-futures-euro-climb-italian-coalition-agreement-reached
WHAT IS THE USD INDEX SAYING?
USD takes a new high since early this year; more upside is expected as the market prices in for a Rate hike; be cautious for now as the market becomes fragile.
TODAY’S NEWS THAT MIGHT AFFECT YOUR TECHNICAL TRADES.
- 7.50am – Japan will release their core machinery data – It’s a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders – in favor of the JPY.
- 9.30am – Australia will release their employment and unemployment data and is expected to better then the previous month or the same. AUD is over-valued – we are cautious for AUD Pairs.
- 10.00am – New Zealand will release their annual budget and is expected to be in favor of NZD.
- 4.00pm – Italy will release their Trade Balance and is expected to be good.
- 8.30pm – Canada will release their Employment – expected to be good. We BUY USDCAD for now.
- 8.30pm – US will release their Manufacturing Index and is expected to be lower but we believe it will better then the previous month.
Overall the market believes that the FED Powell and his team is preparing to wind-down loose monetary policies to avoid massive loose money and inflating the financial market which is not real. USD is the focus for now.
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