Written by Jimmy McGiv
Orlando, Florida (Reuters) – Trading Day
Rally faded after feeding, global caution escalates
The American markets have struggled for a clear direction on Thursday, as investors have cooled some of their optimism about the Federal Reserve’s point of view, Jerome Powell, that the economy is in good condition and that the high prices related to tariffs would be transient.
The Wall Street Al -Steve momentum has faded since the day before the day and the treasury treasury, and the dollar rose, indicating a broader “risk” tone. Gold, which has already climbed 16 % this year to its new levels, went on at home as well.
It remains to see whether Powell’s confidence will be justified. Signs are fateful, as I will explain below. Warnings from all over the world spread about unconfirmed expectations this week, from the Bank of Japan on Wednesday to the Bank of England, the Swiss National Bank, the Swedish Rix Bank Bank and European Central Bank Christine Lagarde on Thursday.
Main market movements today.
* Wall Street is closed equally, with Dowending apartment, S&P 500, a decrease of 0.2 % and NASDAQ off 0.3 %. * European stocks after more severe losses, as defensive stocks are 2 % and DAX in Germany by 1.5 %. * The New Zealand dollar drowns 1 %, which is the largest step in G10FX, although the country exits the recession. It is the second worst G10 against the besieged ALLYEAR Greenback, only behind the Canadian dollar. * Foundation of a two -year doctrine of doctrine in the United Kingdom, flattening the curve, after “Hawkishhold” of England Bank. * Gold ends flat, so it is clear that it is not a “step.” But it is impossible that after a 16 % mobilization this year – on the right track for a quarter of 40 years ago – the record is still hugging $ 3,000/ounces. * The Central Bank in Türkiye raises its loan during the night Rateeto by 46 % from 42.5 % to face a lira diving to a record level at 42 dollars on Wednesday. It closes a lira at 38.00 per dollar Thursday, not changed a little day.
Therefore, the next day for the back of the back before, the markets took a more sanctification of the new economic expectations in the Federal Reserve and the Powell Press Conference. DHINGRA from BNP Paribas, given the level of economic uncertainty, may have always been a “transient” reaction.
And so it seems. Powell already comes to some FLAK, although it is not completely unexpected. president Donald Trump posted the truth platform late on Wednesday: “The Federal Reserve will be much better in setting cut rates when the customs tariff begins to move (easy!) To the economy. Do the right thing.”
Investors have now begun to turn their attention to April 2, when the proposed mutual definitions become Trump. If they run as planned, it is likely that other countries will take counter measures and “TAT” spiral can accelerate. This will be bad news for global growth, inflation and markets.
Economists in Deutsche said on Thursday that the high uncertainty in commercial policy could fly 0.75 percentage of GDP to mid -2016. But this assumes that uncertainty is quickly due to “natural”. If it remains at the current levels until June, the growth strike may be double.
As the old old saying goes, if the United States is in a cold – especially those that are severe – the rest of the world will thirst.
Investors invest the transition battle lines for recession
The fate of the US financial markets this year depends largely on whether any inflation closed with tariffs may be “transient”, allowing the federal reserve to reduce interest rates, or whether the central bank stumbles through the “inflation” ghost.
The first scenario is the only chair that Jerome Powell explained on Wednesday as the “basic issue” of the Central Bank, which sparked a strong gathering in Wall Street and a sharp decrease in the returns of treasury bonds. So it is dangerous, right?
Investors have chosen to ignore the second scenario, although it is more obvious to derive from the revised economic expectations at the Federal Reserve.
Political makers now expect higher enlargement and useful growth. The average interest rate of “DOT conspiracy” has not changed from December, and still indicates this year’s discounts, but there is a ongoing transformation – then eight politicians believe that one definitely or nothing at all will be appropriate this year. So, risk?
The “team transfer” may have stolen a march in the “stagnation of the team”, but many stars will need to agree with them to appear victorious in the long run.
The word T.
Many investors are likely to tremble when Powell called the word T on Wednesday, given that the Federal Reserve had to maintain higher rates for a longer period because increased inflation after birth was not like Powell, then Treasury Secretary Janet Yellen claimed.
However, Powell is right that inflation caused by the trade war of President Donald Trump was transient. Academic studies indicate that the impact in the first round of the Trump tariff for the year 2018 added up to 0.3 percentage points for the basic PCE enlargement, but the annual PCE inflation in 2018 did not exceed 2 % and decreased in 2019.
However, the credibility of the Federal Reserve was beaten with the “transition” disaster after guardianship, so Powell may leave himself and an open institution for more attacks if any future price proves to be the most bargaining bargaining.
This is a real danger because Trump’s proposed tariff is a completely different arrangement this time. The Foston paper that feeds Boston last month estimated that the effect in the first round of tariffs could add between 1.4 and 2.2 percentage points to the basic PCE.
This will have a deeper and longer effect on inflation. Federal reserve officials are cautious. Not only did the average inflation forecast for 2025, but some also raised their expectations for 2026 and 2027, and 18 out of 19 believe that price risk is still deviant to the upward trend.
Stagnation
It should also be noted that federal reserve officials have reduced their expectations much more than they raised their expectations for inflation.
Growth expectations fell 2025 to 1.7 % of 2.1 %, and decreased to 1.8 % for the next two years. It is recognized that this is still decent growth and not anywhere near the recession, but it will constitute the first consecutive years of sub-expansion 2 % since 2011-12.
Moreover, 18 out of 19 Federal Reserve officials believe that growth risk is still a negative side, compared to only five in December. Even if the Federal Reserve reduces prices, it is likely that the economy in response to unemployment is more rolling and photographing unemployment than anything else. Will that be “dangerous”?
While no one talks about returning to the seventies, the risk of stagnation rises, which greatly complicates the FBI reaction function. The price reduction tape rises, and it is difficult to see how this creates a positive environment for risk risks-that is, unless the team’s criticism appears victorious in the end.
What can the markets move tomorrow?
* Japanese consumer inflation (February) * Product prices in South Korea (February) * Consumer prices in Malaysia (February) * New Zealand Trade (February) * Thailand Trade (February) (February) (February)
If you have more time to read today, here are some of the articles I recommend to help you understand what happened in the market today.
1.
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(Written by Jimmy McGiv, edited by Diane Kraft)
