- 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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