Sunday , December 5 2021

So just ran honeymoon market with commercial ceasefire?



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But that was yesterday added a new chapter in the trade war in the United States. and China following the ceasefire announced by the G-20 to 90 days. Yesterday there was a sound of the start of the ceasefire because the economic consultant & # 39; Trump, Larry Kudlow, told the press on Monday that "the truce" will start in 1 & # 39; January, Blanca issued a statement asserting that began on 1 & # 39; December. Trump himself confirmed by & # 39; Twitter that the negotiating period has already started and will last 90 days "unless extended." On Monday, Treasury Secretary Steven Mnuchin expressed his hope that the two largest economies in the world will change this business ceasefire in "real deal."

Why so much noise on Wall St?

When everything seemed to indicate that Wall St. came close to smooth year, the flattening of the curve of the US interest rate. and its possible investment emerged as central to the debate markets. Moreover, it is divided into "sponsors" of the Fed Committee (FOMC). The minutes of the meeting & # 39; in May showed that the members of the FOMC discussed profile & # 39; straining in the interest rate structure. In view & # 39; these officials, there are many reasons to explain this phenomenon, such forecasts & # 39; gradual increases in the price of money, Pressure & # 39; below balance remains high and the Fed programs & # 39; purchase & # 39; assets & # 39; Other central banks. , As well as reducing investor forecasts the rate of & # 39; long-term real interest rate neutral. Moreover, revealed that "a few" members of the FOMC indicated that these factors can make "the slope of the yield curve of bonds less reliable sign of & # 39; future economic activity". However, "many" members of the FOMC commented that "it will be important to monitor the slope of the rate curve, as highlighted historical regularity with which curve & # 39; invert performance indicate increasing risk & # 39; recession "in the US. F & # 39; this context, the Fed x & # 39; likely will face decisions & # 39; policy & # 39; challenging short & # 39; time if the economy continues to grow & # 39; above potential, core inflation above 2% and the unemployment rate remains & # 39; well under even more therefore arises speculation that the Fed, in case expectations inflation exceeds forecasts, you & # 39; reduce its balance b & # 39; more aggressive mode instead raise more interest, especially given the flattening of the rate curve. Of course there are fears & # 39; that the Fed will accelerate monetary pressure. While some consider a natural part of the flattening of the curve rate, warned that if no Fed relentlessly pursuing monetary normalization, there is a risk that political and market expectations reverse the yield curve . The key to the phenomenon of & # 39; "investment" is in addition to the anticipation & # 39; recessions, this is & # 39; damage to market confidence and credibility of the Fed. There are fears that the Fed considers this phenomenon is not a problem and accidentally incur monetary policy causes a recession. If the difference between 2 and 10 years become negative, it will be the signal buckle belts for a hard landing.

As commercial ceasefire, it seems that investors m & # 39; should celebrate the ceasefire yet. The market showed some relief after an agreement between Donald Trump and President Xi Jinping, but now they understand that the difficult part is to reach a final agreement before the end of & # 39; 90 days, beyond the start date. There is a lack of & # 39; trust that rivalry & # 39; US and China can & # 39; easily overcome, especially with regard to intellectual property and market access. It is expected more volatility.

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