fredag den 23. august 2019

Jackson Hole speech by Powell

  • What:  Fed's Chairman Powell delivers something for both doves & hawks
  • Why:    Fed feels trade and safety dictates an outlook which is ok but worsening (ie.: probably approve another 25 bps cut to play to the new central theme: Regret analysis
  • Action: Stay long GOLD – (from earlier note – move stop to entry…)
  • Link:  Full speech: https://www.federalreserve.gov/newsevents/speech/powell20190823a.htm
  • Risk: China changed the dynamics of event risk. September 1st now CRITICAL date – observe USDCNH for indication of risk on/risk off. Expect harsh response from Trump on China very soon.

 

 

Fed message from all the governors and from Powell been consistent – and in our opinion wrong – but the message is simple?

 

  • Economy ok for now – 'outlook favorable'
  • More downside than upside
  • Main downside: trade

 

 

Short-term US rates moved down 4.5 bps … Dovish (good for risk on)

 

 

 

2Y – down 4.6 bps

10Y – down 3 bps

Fed Near-term (Fed next six quarters) – 2 cuts

2y vs 10y - +1 bps – trading around zero

 

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

https://www.home.saxo/insights/news-and-research/authors/steen-jakobsen

 

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