So little has left the honeymoon of the markets with the commercial truss?

But it was added yesterday to a new chapter in the US. It. Trade war. And China after the truce announced in the G20 for 90 days. Yesterday, there was a rush about the start of the truce because economic adviser Trump, Larry Koudow, told the press on Monday that "The Ceasefire" will begin on January 1, while the House Blanka issued a statement that it It began on 1 December. Trump confirmed by Twitter that the negotiation period has already begun and will last 90 days "unless it is extended." On Monday, Treasury Secretary Steven Muchin expressed his hope that the two largest economies in the world will turn this business into "a real agreement".

Why so much noise on wall st?

When everything was to indicate that wall st. Is about to close the year smoothly, the flattening of the US. It. Interest rate curve. And its possible investment emerged as the central debate for the markets. The frams member discovered the flattening profile in the interest rate structure, detailing the sponsors of the Feed Committee (FOMC). In the opinion of the officials, there are several reasons to explain this phenomenon, such as the forecast of gradual rises at the cost of money, the downward pressure from the continued high weight of the Fed and the asset purchase programs of other central banks. , As well as a reduction of the investors' forecasts on the long-term neutral real interest rate. In addition, it revealed that "a few" FOMC members showed that the factors can make "the bond of the bonding abruption curve a less reliable signal of future economic activity". However, "some" FOMC members commented that "it will be important to monitor the slope of the curve curve, since they have emphasized the historical regulation with which an inverted yield curve has indicated an increasing risk of recession" in the US. It. In this context, the Fed is likely to complete challenging policy decisions in the short term if the economy continues to grow above potential, inflation rate is exceeding 2%, and the unemployment rate remains well under full employment employment and even more so, speculation arises The Fed, in the event that inflation expectations exceed forecasts, can reduce its weight more aggressively instead of rising interest more, especially due to the flattening of the curve curve. Of course, it is the fear that the Fed will screw up with the monetary squeeze. While some consider natural part of the flattening of the curve curve, warn that if the Fed relentlessly pursue monetary normalization, there is a risk that its policy and market expectations reverse the wear curve. The key to the "investment" phenomenon is that in addition to anticipating rises, it will damage the confidence of the market and the credibility of the Fed. It is feared that the Fed will consider this phenomenon not a problem and bring an error Monetary policy that is a recession. If the difference between 2 and 10 years becomes negative, it will be the signal to buckle the belts for heavy landing.

With regard to the commercial truce, it seems that investors should not celebrate the file yet. The market has shown some relief after the agreement between Presidents Donald Trump and Shi Jinping, but now they understand that the hard part is to get a final agreement before the 90-day deadline, beyond the start date. It is distrust that the US It. Rivalry and China are easily overcome, especially with consideration for intellectual property and market access. More volatility is expected.

Source link