Friday Sep 20 2024 13:39
4 min
J.P. Morgan was out with this yesterday:
“Over the past 40 years, the Fed has cut rates 12 times with the S&P 500 within 1% of an all-time highs. The market was higher a year later all 12 times with an average return of around 15%”.
The S&P 500 index, meanwhile, closed yesterday’s trading up 1.7% at 5,713.64 — a record high.
The dollar continues to linger at multi-month lows. Sterling has gone to $1.33, its best in a long time, with the Bank of England standing pat on rates. The UK now has higher rates for an economy that is growing at a speed about one third that of the US and inflation is lower — go figure. The Bank of Japan was also unchanged overnight.
This week the Federal Reserve went large, opting for a 50-basis-point cut, while the BoE and Norges Bank stood still, South Africa’s Reserve Bank cut for the first time in years, and Brazil hiked — which means monetary policy divergence is back. Combined with the Fed doing the jumbo cut, it’s a) good news for emerging markets and b) good news for FX volatility — if that’s your thing.
Сalculate your hypothetical P/L (aggregated cost and charges) if you had opened a trade today.
Market
Instrument
Account Type
Direction
Quantity
Amount must be equal or higher than
Amount should be less than
Amount should be a multiple of the minimum lots increment
USD
EUR
GBP
CAD
AUD
CHF
ZAR
MXN
JPY
Value
Commission
Spread
Leverage
Conversion Fee
Required Margin
Overnight Swaps
Past performance is not a reliable indicator of future results.
All positions on instruments denominated in a currency that is different from your account currency, will be subject to a conversion fee at the position exit as well.
The BoJ stood still and said there is no need to hurry rate hikes — given the Fed’s jumbo move another kick in the guts to the low volume carry would have been unnecessary. But a key inflation gauge has accelerated for a fourth straight month, so they will have to hike at some point. The South African central bank was able to kick off its easing cycle, largely thanks to the Fed, I suppose, but also because inflation has cooled a lot.
August’s 4.4% print was the first time it dipped below the midpoint of the SARB’s 3-6% target range in more than three years. Brazil is going the other direction and it seems the hike was about restoring credibility (note, I am not a watcher of LatAm markets). The Norges Bank is seen cutting soon, while the Bank of England is seen cutting even sooner.
The gold price rallied to fresh all-time highs this morning – rates down, economy purring along nicely – the hedge against reacceleration in inflation is clearly a factor here beyond simple weak dollar/lower real yields mechanics.
There appears to be no stopping the 4D trade (debt debasement and dollar devaluation) and I can’t see why we don’t get to $3,000 in the next year, though we are ripe for a retracement at this stage with the extension higher maybe needing some consolidation.
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
Tags Directory
View allLatest
View all
Tuesday, 19 November 2024
4 min
Monday, 18 November 2024
5 min
Monday, 18 November 2024
3 min
EN
