English
Market News Gold trading reminder: US stocks rebounded, gold prices were blocked by strong resistance, and a large wave of PMI data in Europe and the United States hit
Gold trading reminder: US stocks rebounded, gold prices were blocked by strong resistance, and a large wave of PMI data in Europe and the United States hit
Although some Fed officials called for a suspension of interest rate hikes in September, the dollar continued to fall overnight, helping gold prices rise to a two-week high near 1865, but the resistance near this position was extremely strong, and the U.S. stock market rebounded, and the European Central Bank strengthened interest rate hikes in July. Gold prices eventually gave up most of their gains. This trading day will usher in the May PMI data of many countries in Europe and the United States. Investors need to pay attention to the changes in the market's expectations for the global economic outlook.
2022-05-24
9626
During the Asian session on Tuesday (May 24), spot gold fluctuated slightly and was currently trading around $1,850. Although some Fed officials called for a suspension of interest rate hikes in September, the dollar continued to fall overnight, helping gold prices rise to a two-week high near 1865, but the resistance near this position was extremely strong, and the U.S. stock market rebounded, and the European Central Bank strengthened interest rate hikes in July. Gold prices eventually gave up most of their gains.
It is worth mentioning that the resistance of the 38.2% retracement level of the May 6 low, May 10 high and 1898-1786 decline is near 1865, which needs to be focused on.
In addition, the minutes of the Fed meeting will be ushered in this week, which is expected to further consolidate the market's expectations for aggressive interest rate hikes by the Fed, which makes the bulls have some scruples. This trading day will usher in the May PMI data of many countries in Europe and the United States. Investors need to pay attention to the changes in the market's expectations for the global economic outlook.
In addition, investors also need to pay attention to news related to the geopolitical situation in Russia and Ukraine and the new crown epidemic.
[Federal Reserve Bostic suggested to suspend operations in September to assess the impact of interest rate hikes on inflation and the economy]
Atlanta Fed President Bostic said on Monday it was "probably reasonable" for the central bank to pause further rate hikes to assess the impact on inflation and the economy, after expected to raise rates by 50 basis points each over the next two months.
Speaking to the Rotary Club of Atlanta, Bostic said, "After the summer ... I think a lot of the action will depend on the fundamental dynamics that we start to see," including inflation that the Fed is trying to contain, and The impact of higher interest rates on the economy.
"I think it might be reasonable to suspend operations in September," Bostic said.
Bostic's remarks were the most public hint yet that the Fed may see enough progress on inflation, or enough signs of weakness in the economy, to pause rate hikes as early as September to assess the situation.
Investors expect the Fed to continue raising rates this year, with the target range for the federal funds rate reaching 2.75%-3% by the end of the year. Some of Bostic's colleagues have called for a more aggressive rate hike to 3.5%, which would mean a 50 basis point hike at all the Fed's remaining meetings this year.
Bostic said he expects action to be less aggressive, with the federal funds rate in the 2%-2.5% range by the end of the year.
He said that despite the risk that more aggressive action might have to be taken, "I'm an optimist and I'm assuming that inflation will definitely have started to come down by then".
Even so, concerns have grown about how resilient the U.S. economy will be in the face of slowing global growth, rising interest rates, falling stock markets and other looming corrections. Bostic said, for example, he expects the impact of higher borrowing costs to become apparent in the coming weeks as rising mortgage rates push potential buyers out of the housing market and households and businesses are wary of the economic outlook. and slow down purchases.
The challenge, Bostic said, is that the Fed will be "on the edge of a knife" to not raise interest rates to levels that could lead to a recession, but also to make sure it does enough to curb price increases.
"The economy's response to rate hikes will accelerate in the coming months," he said. "Without flexibility, our actions risk continuing to deviate from the equilibrium that these markets have found."
[The U.S. dollar continued to fall to a new low in nearly four weeks on Monday]
The U.S. dollar index fell on Monday after the European Central Bank signaled a move away from negative interest rates, riskier currencies followed stocks higher and the Federal Reserve Bostic suggested a pause in September to assess the impact of rate hikes on inflation and the economy.
European Central Bank President Christine Lagarde said on Monday that by the end of September, the ECB could take key interest rates out of negative territory and could raise them further.
U.S. stocks followed European stocks higher on Monday after falling last week. The euro's gains came as the dollar continued its broad decline after last week's sell-off.
Investors reacted to Lagarde's remarks on Monday and eased fears that Europe was headed for a recession and the U.S. economic outlook seemed less encouraging, according to Erik Nelson, a macro strategist at Wells Fargo, leading to appetite for riskier assets Increase.
"We're seeing increasing optimism about global growth, European growth, China growth, U.K. growth, but less optimism about U.S. growth. So the theme of divergence in growth is really a big thing, bad for the dollar, "Nelson said.
The U.S. dollar index closed down 0.92% on Monday at 102.07, the lowest intraday hit 102.03, the lowest since April 27, and a 20-year high of 105.01 on May 13.
JB Mackenzie, managing director of futures and foreign exchange at Charles Schwab, said. Whether the dollar takes a breather or continues to fall will depend on the Fed news. He will be watching closely the minutes of the Fed's meeting this week for policy clues.
Speculators' net long dollar positions fell last week after hitting their highest since late November in the previous week, according to data from the U.S. Commodity Futures Trading Commission (CFTC) released on Friday.
[Wells Fargo: The dollar rally will pause and enter a consolidation trend in the next few weeks]
Wells Fargo believes the dollar's rally will pause and enter a consolidation trend in the coming weeks as investors digest disappointing economic data and expectations for Fed hawkishness peak.
Wells Fargo's currency strategist Erik Nelson wrote in a Monday report that the dollar's near-term outlook is that the U.S. Federal Reserve has signaled that it could raise rates by 50 basis points each at its next two meetings and has reduced the likelihood of a larger rate hike. unlikely to rise.
"The hawkishness of the Fed seems to have finally stabilized," Nelson said, noting that at the same time, the European Central Bank brought forward policy tightening expectations. This change in central bank dynamics limits the dollar's upside, though the Fed could become more hawkish later in the year depending on how inflation evolves, he said.
After more than 10 years without raising interest rates, the European Central Bank has begun to embrace a more aggressive policy path as European inflation approaches 8%. In a blog post on Monday, ECB President Christine Lagarde said the ECB could start raising interest rates in July and move out of negative rates by the end of September. Some other ECB officials want to raise rates sooner. EUR/USD rose to its highest level in nearly a month after her speech.
“The only things the dollar has been supporting are interest rate differentials and a more aggressive Fed. Now, other central banks are joining in and starting to tighten monetary policy more significantly, so the gap is closing,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. said in a report.
Nelson said a series of disappointing U.S. economic data, including a drop in consumer confidence, a slowdown in manufacturing and weak retail sales, could also weigh on the dollar in the near term, especially after U.K. retail sales and euro zone GDP beat expectations on the occasion.
However, Wells Fargo remains bullish on the U.S. dollar before the end of the year, and believes that next month will be a "pause rather than end" of the dollar's structural rally.
[Bridgewater Fund co-chief investment officer warns the market is "too optimistic"]
Despite weeks of turmoil in markets that saw both bonds and stocks fall, Greg Jensen, co-chief investment officer at Bridgewater, the world's largest hedge fund, said the market was still "too optimistic" and that investors had not yet adjusted to rising inflation and slowing growth. a "long-term change".
In the latest episode of the Odd Lots podcast, Jensen warned that the Fed raising interest rates and shrinking its balance sheet in response to the highest inflation in decades is a toxic combination for asset prices.
Financial markets have come under intense pressure of late, with the S&P 500 down about 18% from its peak and the benchmark 10-year U.S. Treasury yield jumping above 3% this month before falling back to 2.78%.
Despite the market moves, Jensen said investors are really just bracing for a relatively smooth landing scenario where the Fed is able to reduce inflation without triggering a recession.
"Market pricing actually reflects a very smooth economic landing," Jensen said. "So I think the market is still pricing in too optimistic today. It's a small change relative to the long-term change we're going through."
He also warned that investors shouldn't expect the Fed to come to their rescue, either. Instead, in order to control inflation, the Fed must tighten financial conditions, which will tie the Fed's hands and feet. Former New York Fed President Bill Dudley and others have also expressed the view that the Fed is not worried about a stock market sell-off, and may actually welcome such a sell-off.
“They want asset prices to come down to a certain level. And even if it goes down more than they want, they weigh inflation. So all of a sudden, it’s a lot more likely to go down before policymakers get their hands on it,” Jensen said. . "In fact, to get there, the stock market has to fall to the point of containing inflation."
[European health authorities call on countries to step up efforts to curb monkeypox outbreaks]
As cases of monkeypox rise, European health officials are calling on countries to assess vaccine availability and increase efforts to identify and report new cases of the virus.
Countries should check the availability of smallpox vaccines, antiviral drugs and protective equipment for healthcare workers, the European Centre for Disease Prevention and Control (ECDC) said on Monday.
Monkeypox cases were previously mostly confined to Africa, but health authorities are concerned about a rise in cases in Europe and North America. The World Health Organization said that as of May 21, 92 cases and 28 suspected cases had been identified in 12 countries outside Africa.
While the potential for further transmission of the virus through close contact is considered high, including among people who have sex with multiple partners, the risk to the wider population is low, with most recent cases having mild symptoms, the ECDC said.
[Nobel Prize winner criticized the Fed’s interest rate hike will only kill the economy, Stiglitz suggested starting from the supply side]
Nobel Laureate in Economics Joseph Stiglitz said that the US economy needs to intervene on the supply side instead of raising interest rates by the Federal Reserve, because this approach cannot control inflation.
"Raising interest rates isn't going to fix inflation," the Columbia University professor told Bloomberg TV's Lisa Abramovicz and Tom Keene at the World Economic Forum in Davos, Switzerland. "It's not going to create more food. It will only increase the difficulty because people will not be able to invest.”
"Raising interest rates isn't going to fix inflation or create more food," Stiglitz said.
The Fed's latest monetary policy meeting minutes are due in a few days, and could shed more light on its increasingly aggressive tightening stance, including consideration of a 50 basis point rate hike earlier this month. Stiglitz thinks a different approach should be taken.
"What's going to be done is to intervene on the supply side," he said. "One of the things that President Biden is trying to do is increase childcare and make more women available to the labor market, thereby taking the constrained labor supply out of the way. release."
The economist argues that food production should also be a priority, both in the U.S. and globally.
"We used to have a food surplus in the U.S. and we can restore that," he said. "At least trying to do everything we can on a global scale to increase supply would help solve that rather than create a depression."
He added that "killing the economy by raising interest rates will not solve the inflation problem at any time."
[Lagarde and many other policymakers have spoken together, the European Central Bank's summer interest rate hike is almost a foregone conclusion]
European Central Bank President Christine Lagarde said on Monday that the ECB could take key interest rates out of negative territory by the end of September and could raise rates further. The central bank's policymakers had been making the case for a rate hike for weeks.
At a time when euro zone inflation is at record highs and becoming more prevalent, Lagarde's remarks hastened a shift in the central bank's policy stance, from having previously largely ruled out a rate hike this year to now saying several more. interest.
"Based on current forecasts, we are likely to exit negative interest rate policy by the end of the third quarter," Lagarde said in a blog post on the ECB's website.
ECB Governing Council member and Bank of France governor Villeroy de Gallo appeared to support that view, cementing market expectations. Villeroy de Gallo, a close ally of Lagarde, is also considered a centrist on the ECB's rate-setting Governing Council.
"If you look at Lagarde's speech this morning, it's probably a foregone conclusion because there's a growing consensus," Villeroy de Gallo told a panel discussion at the World Economic Forum. "The main problem, at least in the short term, is definitely inflation."
Markets now expect the ECB to raise rates by 110 basis points this year, or more than 25 basis points at each policy meeting starting in July.
Villeroy de Gallo countered an argument that higher interest rates would further slow economic growth and could push the 19-nation euro zone into recession, saying the euro zone economy was resilient.
"I would downplay the short-term trade-off between inflation and growth. In the short-term, our priority is clearly ... fighting inflation," he said.
Bundesbank President and European Central Bank governor Nagel, a longtime advocate of rate hikes, said relatively fast wage growth could be imminent, another reason to tighten monetary policy. Wage growth is a prerequisite for persistent inflation.
"I believe that in the second half of the year ... we will see wage increases following wage negotiations," he said.
Lagarde opened the door to further rate hikes, toward what economists call the neutral rate — the level at which economic output is commensurate with its potential, or even above it.
Lagarde added: "If we see inflation stabilizing at 2% over the medium term, then a further gradual normalization of interest rates towards neutral would be appropriate."
"If a positive demand shock causes the euro zone economy to overheat, it would be reasonable to continue raising rates after policy rates reach neutral," she said.
[Zelensky: Ready to meet with Putin and will only discuss armistice]
On the 23rd local time, according to Ukraine's UNIAN news agency, Ukrainian President Volodymyr Zelensky said he was ready to meet with Russian President Vladimir Putin and would only discuss the truce. Zelensky said he had no desire to meet with the intermediary, and in principle would not meet anyone from Russia except Putin. He stressed that the only issue that could be discussed in a meeting with Putin is a truce.
[U.S. stocks rose sharply on Monday]
U.S. stocks ended higher on Monday, as a rally in bank stocks and a rebound in market-leading technology shares drove broad gains, after Wall Street posted its longest weekly decline since the dot-com bubble burst more than 20 years ago. The three major U.S. stock indexes rose between 1.6% and 2.0%, with the biggest boost from the rebound of technology giants Apple and Microsoft.
Shares of interest-rate-sensitive banks jumped 5.1 percent after JPMorgan, the largest U.S. bank, raised its forecast for interest income for the year. Shares of JPMorgan Chase rose 6.2%.
“It feels more like a relief rally than a fundamental change in investor sentiment,” said Oliver Pursche, senior vice president at Wealthspire Advisors. Right."
On Friday, the S&P 500 closed 18.7% below its Jan. 3 record high. A close 20% or more below the last high for the benchmark stock index would confirm that the index has been in a bear market since then.
Markets have been volatile in recent weeks, with concerns over persistently high inflation and aggressive efforts by the Federal Reserve to rein in inflation as the global economy grapples with the fallout from Russia’s invasion of Ukraine.
"Today, the market seems less concerned about inflation factors and whether the Fed is able to push for a soft landing," said Chuck Carlson, chief executive of Horizon Investment Services. Still, he added, "risks remain skewed to the downside."
The Dow Jones Industrial Average rose 618.34 points, or 1.98%, to 31,880.24, the S&P 500 gained 72.39 points, or 1.86%, to 3,973.75 and the Nasdaq Composite added 180.66 points, or 1.59%, to 11,535.28.
Investors will get a glimpse of what policymakers are thinking when the Fed releases minutes from its most recent policy meeting on Wednesday.
Economic indicators due this week are likely to further support the view that inflation peaked in March and show whether high prices have hurt consumers' purchasing power.
On the whole, the short-term rebound momentum of gold has weakened, and the US dollar's correction and decline may gradually slow down. If the stock market rebounds further, the gold price may face some short-term fluctuation risks. If the dollar extends its decline, gold bulls may be looking for more room for a rebound. Before the release of the Fed minutes, the market also had some wait-and-see mood, and the short-term gold price was inclined to run in shock.
Jim Wycoff, senior analyst at Kitco, said: "Gold has seen a strong corrective rally as the dollar has fallen sharply. Risk appetite among traders and investors is still far from strong enough, which is driving some safe-haven demand for gold. Investing People are starting to realize that the inflation problem will last longer, not be temporary.”
Tim Hayes, chief global investment strategist at Ned Davis Research, said gold's gains could be fleeting as prices did not break above the 50-day moving average at $1,914.76 an ounce.
Hayes mentioned that if the U.S. dollar remains elevated, the team's investment recommendation for gold could be revised down from neutral to pessimistic. "The U.S. 3-year and 10-year Treasury yields remain relatively high and have been supporting the dollar, compared to most other currencies falling below their 50-day moving averages," he explained.
Analysts at Sevens Report Research pointed out that gold has risen recently as nominal and real yields fell and the dollar's gains took a break. But looking forward, gold is still in a downward trend, and real yields and the dollar will be the key. If the two climb higher, it will be difficult for gold prices to stay above $1,800 an ounce.
At GMT+8 09:50, spot gold is now at $1,850.44 per ounce.
It is worth mentioning that the resistance of the 38.2% retracement level of the May 6 low, May 10 high and 1898-1786 decline is near 1865, which needs to be focused on.
In addition, the minutes of the Fed meeting will be ushered in this week, which is expected to further consolidate the market's expectations for aggressive interest rate hikes by the Fed, which makes the bulls have some scruples. This trading day will usher in the May PMI data of many countries in Europe and the United States. Investors need to pay attention to the changes in the market's expectations for the global economic outlook.
In addition, investors also need to pay attention to news related to the geopolitical situation in Russia and Ukraine and the new crown epidemic.
Fundamentals are mostly bullish
[Federal Reserve Bostic suggested to suspend operations in September to assess the impact of interest rate hikes on inflation and the economy]
Atlanta Fed President Bostic said on Monday it was "probably reasonable" for the central bank to pause further rate hikes to assess the impact on inflation and the economy, after expected to raise rates by 50 basis points each over the next two months.
Speaking to the Rotary Club of Atlanta, Bostic said, "After the summer ... I think a lot of the action will depend on the fundamental dynamics that we start to see," including inflation that the Fed is trying to contain, and The impact of higher interest rates on the economy.
"I think it might be reasonable to suspend operations in September," Bostic said.
Bostic's remarks were the most public hint yet that the Fed may see enough progress on inflation, or enough signs of weakness in the economy, to pause rate hikes as early as September to assess the situation.
Investors expect the Fed to continue raising rates this year, with the target range for the federal funds rate reaching 2.75%-3% by the end of the year. Some of Bostic's colleagues have called for a more aggressive rate hike to 3.5%, which would mean a 50 basis point hike at all the Fed's remaining meetings this year.
Bostic said he expects action to be less aggressive, with the federal funds rate in the 2%-2.5% range by the end of the year.
He said that despite the risk that more aggressive action might have to be taken, "I'm an optimist and I'm assuming that inflation will definitely have started to come down by then".
Even so, concerns have grown about how resilient the U.S. economy will be in the face of slowing global growth, rising interest rates, falling stock markets and other looming corrections. Bostic said, for example, he expects the impact of higher borrowing costs to become apparent in the coming weeks as rising mortgage rates push potential buyers out of the housing market and households and businesses are wary of the economic outlook. and slow down purchases.
The challenge, Bostic said, is that the Fed will be "on the edge of a knife" to not raise interest rates to levels that could lead to a recession, but also to make sure it does enough to curb price increases.
"The economy's response to rate hikes will accelerate in the coming months," he said. "Without flexibility, our actions risk continuing to deviate from the equilibrium that these markets have found."
[The U.S. dollar continued to fall to a new low in nearly four weeks on Monday]
The U.S. dollar index fell on Monday after the European Central Bank signaled a move away from negative interest rates, riskier currencies followed stocks higher and the Federal Reserve Bostic suggested a pause in September to assess the impact of rate hikes on inflation and the economy.
European Central Bank President Christine Lagarde said on Monday that by the end of September, the ECB could take key interest rates out of negative territory and could raise them further.
U.S. stocks followed European stocks higher on Monday after falling last week. The euro's gains came as the dollar continued its broad decline after last week's sell-off.
Investors reacted to Lagarde's remarks on Monday and eased fears that Europe was headed for a recession and the U.S. economic outlook seemed less encouraging, according to Erik Nelson, a macro strategist at Wells Fargo, leading to appetite for riskier assets Increase.
"We're seeing increasing optimism about global growth, European growth, China growth, U.K. growth, but less optimism about U.S. growth. So the theme of divergence in growth is really a big thing, bad for the dollar, "Nelson said.
The U.S. dollar index closed down 0.92% on Monday at 102.07, the lowest intraday hit 102.03, the lowest since April 27, and a 20-year high of 105.01 on May 13.
JB Mackenzie, managing director of futures and foreign exchange at Charles Schwab, said. Whether the dollar takes a breather or continues to fall will depend on the Fed news. He will be watching closely the minutes of the Fed's meeting this week for policy clues.
Speculators' net long dollar positions fell last week after hitting their highest since late November in the previous week, according to data from the U.S. Commodity Futures Trading Commission (CFTC) released on Friday.
[Wells Fargo: The dollar rally will pause and enter a consolidation trend in the next few weeks]
Wells Fargo believes the dollar's rally will pause and enter a consolidation trend in the coming weeks as investors digest disappointing economic data and expectations for Fed hawkishness peak.
Wells Fargo's currency strategist Erik Nelson wrote in a Monday report that the dollar's near-term outlook is that the U.S. Federal Reserve has signaled that it could raise rates by 50 basis points each at its next two meetings and has reduced the likelihood of a larger rate hike. unlikely to rise.
"The hawkishness of the Fed seems to have finally stabilized," Nelson said, noting that at the same time, the European Central Bank brought forward policy tightening expectations. This change in central bank dynamics limits the dollar's upside, though the Fed could become more hawkish later in the year depending on how inflation evolves, he said.
After more than 10 years without raising interest rates, the European Central Bank has begun to embrace a more aggressive policy path as European inflation approaches 8%. In a blog post on Monday, ECB President Christine Lagarde said the ECB could start raising interest rates in July and move out of negative rates by the end of September. Some other ECB officials want to raise rates sooner. EUR/USD rose to its highest level in nearly a month after her speech.
“The only things the dollar has been supporting are interest rate differentials and a more aggressive Fed. Now, other central banks are joining in and starting to tighten monetary policy more significantly, so the gap is closing,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. said in a report.
Nelson said a series of disappointing U.S. economic data, including a drop in consumer confidence, a slowdown in manufacturing and weak retail sales, could also weigh on the dollar in the near term, especially after U.K. retail sales and euro zone GDP beat expectations on the occasion.
However, Wells Fargo remains bullish on the U.S. dollar before the end of the year, and believes that next month will be a "pause rather than end" of the dollar's structural rally.
[Bridgewater Fund co-chief investment officer warns the market is "too optimistic"]
Despite weeks of turmoil in markets that saw both bonds and stocks fall, Greg Jensen, co-chief investment officer at Bridgewater, the world's largest hedge fund, said the market was still "too optimistic" and that investors had not yet adjusted to rising inflation and slowing growth. a "long-term change".
In the latest episode of the Odd Lots podcast, Jensen warned that the Fed raising interest rates and shrinking its balance sheet in response to the highest inflation in decades is a toxic combination for asset prices.
Financial markets have come under intense pressure of late, with the S&P 500 down about 18% from its peak and the benchmark 10-year U.S. Treasury yield jumping above 3% this month before falling back to 2.78%.
Despite the market moves, Jensen said investors are really just bracing for a relatively smooth landing scenario where the Fed is able to reduce inflation without triggering a recession.
"Market pricing actually reflects a very smooth economic landing," Jensen said. "So I think the market is still pricing in too optimistic today. It's a small change relative to the long-term change we're going through."
He also warned that investors shouldn't expect the Fed to come to their rescue, either. Instead, in order to control inflation, the Fed must tighten financial conditions, which will tie the Fed's hands and feet. Former New York Fed President Bill Dudley and others have also expressed the view that the Fed is not worried about a stock market sell-off, and may actually welcome such a sell-off.
“They want asset prices to come down to a certain level. And even if it goes down more than they want, they weigh inflation. So all of a sudden, it’s a lot more likely to go down before policymakers get their hands on it,” Jensen said. . "In fact, to get there, the stock market has to fall to the point of containing inflation."
[European health authorities call on countries to step up efforts to curb monkeypox outbreaks]
As cases of monkeypox rise, European health officials are calling on countries to assess vaccine availability and increase efforts to identify and report new cases of the virus.
Countries should check the availability of smallpox vaccines, antiviral drugs and protective equipment for healthcare workers, the European Centre for Disease Prevention and Control (ECDC) said on Monday.
Monkeypox cases were previously mostly confined to Africa, but health authorities are concerned about a rise in cases in Europe and North America. The World Health Organization said that as of May 21, 92 cases and 28 suspected cases had been identified in 12 countries outside Africa.
While the potential for further transmission of the virus through close contact is considered high, including among people who have sex with multiple partners, the risk to the wider population is low, with most recent cases having mild symptoms, the ECDC said.
[Nobel Prize winner criticized the Fed’s interest rate hike will only kill the economy, Stiglitz suggested starting from the supply side]
Nobel Laureate in Economics Joseph Stiglitz said that the US economy needs to intervene on the supply side instead of raising interest rates by the Federal Reserve, because this approach cannot control inflation.
"Raising interest rates isn't going to fix inflation," the Columbia University professor told Bloomberg TV's Lisa Abramovicz and Tom Keene at the World Economic Forum in Davos, Switzerland. "It's not going to create more food. It will only increase the difficulty because people will not be able to invest.”
"Raising interest rates isn't going to fix inflation or create more food," Stiglitz said.
The Fed's latest monetary policy meeting minutes are due in a few days, and could shed more light on its increasingly aggressive tightening stance, including consideration of a 50 basis point rate hike earlier this month. Stiglitz thinks a different approach should be taken.
"What's going to be done is to intervene on the supply side," he said. "One of the things that President Biden is trying to do is increase childcare and make more women available to the labor market, thereby taking the constrained labor supply out of the way. release."
The economist argues that food production should also be a priority, both in the U.S. and globally.
"We used to have a food surplus in the U.S. and we can restore that," he said. "At least trying to do everything we can on a global scale to increase supply would help solve that rather than create a depression."
He added that "killing the economy by raising interest rates will not solve the inflation problem at any time."
The fundamentals are mainly bearish
[Lagarde and many other policymakers have spoken together, the European Central Bank's summer interest rate hike is almost a foregone conclusion]
European Central Bank President Christine Lagarde said on Monday that the ECB could take key interest rates out of negative territory by the end of September and could raise rates further. The central bank's policymakers had been making the case for a rate hike for weeks.
At a time when euro zone inflation is at record highs and becoming more prevalent, Lagarde's remarks hastened a shift in the central bank's policy stance, from having previously largely ruled out a rate hike this year to now saying several more. interest.
"Based on current forecasts, we are likely to exit negative interest rate policy by the end of the third quarter," Lagarde said in a blog post on the ECB's website.
ECB Governing Council member and Bank of France governor Villeroy de Gallo appeared to support that view, cementing market expectations. Villeroy de Gallo, a close ally of Lagarde, is also considered a centrist on the ECB's rate-setting Governing Council.
"If you look at Lagarde's speech this morning, it's probably a foregone conclusion because there's a growing consensus," Villeroy de Gallo told a panel discussion at the World Economic Forum. "The main problem, at least in the short term, is definitely inflation."
Markets now expect the ECB to raise rates by 110 basis points this year, or more than 25 basis points at each policy meeting starting in July.
Villeroy de Gallo countered an argument that higher interest rates would further slow economic growth and could push the 19-nation euro zone into recession, saying the euro zone economy was resilient.
"I would downplay the short-term trade-off between inflation and growth. In the short-term, our priority is clearly ... fighting inflation," he said.
Bundesbank President and European Central Bank governor Nagel, a longtime advocate of rate hikes, said relatively fast wage growth could be imminent, another reason to tighten monetary policy. Wage growth is a prerequisite for persistent inflation.
"I believe that in the second half of the year ... we will see wage increases following wage negotiations," he said.
Lagarde opened the door to further rate hikes, toward what economists call the neutral rate — the level at which economic output is commensurate with its potential, or even above it.
Lagarde added: "If we see inflation stabilizing at 2% over the medium term, then a further gradual normalization of interest rates towards neutral would be appropriate."
"If a positive demand shock causes the euro zone economy to overheat, it would be reasonable to continue raising rates after policy rates reach neutral," she said.
[Zelensky: Ready to meet with Putin and will only discuss armistice]
On the 23rd local time, according to Ukraine's UNIAN news agency, Ukrainian President Volodymyr Zelensky said he was ready to meet with Russian President Vladimir Putin and would only discuss the truce. Zelensky said he had no desire to meet with the intermediary, and in principle would not meet anyone from Russia except Putin. He stressed that the only issue that could be discussed in a meeting with Putin is a truce.
[U.S. stocks rose sharply on Monday]
U.S. stocks ended higher on Monday, as a rally in bank stocks and a rebound in market-leading technology shares drove broad gains, after Wall Street posted its longest weekly decline since the dot-com bubble burst more than 20 years ago. The three major U.S. stock indexes rose between 1.6% and 2.0%, with the biggest boost from the rebound of technology giants Apple and Microsoft.
Shares of interest-rate-sensitive banks jumped 5.1 percent after JPMorgan, the largest U.S. bank, raised its forecast for interest income for the year. Shares of JPMorgan Chase rose 6.2%.
“It feels more like a relief rally than a fundamental change in investor sentiment,” said Oliver Pursche, senior vice president at Wealthspire Advisors. Right."
On Friday, the S&P 500 closed 18.7% below its Jan. 3 record high. A close 20% or more below the last high for the benchmark stock index would confirm that the index has been in a bear market since then.
Markets have been volatile in recent weeks, with concerns over persistently high inflation and aggressive efforts by the Federal Reserve to rein in inflation as the global economy grapples with the fallout from Russia’s invasion of Ukraine.
"Today, the market seems less concerned about inflation factors and whether the Fed is able to push for a soft landing," said Chuck Carlson, chief executive of Horizon Investment Services. Still, he added, "risks remain skewed to the downside."
The Dow Jones Industrial Average rose 618.34 points, or 1.98%, to 31,880.24, the S&P 500 gained 72.39 points, or 1.86%, to 3,973.75 and the Nasdaq Composite added 180.66 points, or 1.59%, to 11,535.28.
Investors will get a glimpse of what policymakers are thinking when the Fed releases minutes from its most recent policy meeting on Wednesday.
Economic indicators due this week are likely to further support the view that inflation peaked in March and show whether high prices have hurt consumers' purchasing power.
Outlook
On the whole, the short-term rebound momentum of gold has weakened, and the US dollar's correction and decline may gradually slow down. If the stock market rebounds further, the gold price may face some short-term fluctuation risks. If the dollar extends its decline, gold bulls may be looking for more room for a rebound. Before the release of the Fed minutes, the market also had some wait-and-see mood, and the short-term gold price was inclined to run in shock.
Jim Wycoff, senior analyst at Kitco, said: "Gold has seen a strong corrective rally as the dollar has fallen sharply. Risk appetite among traders and investors is still far from strong enough, which is driving some safe-haven demand for gold. Investing People are starting to realize that the inflation problem will last longer, not be temporary.”
Tim Hayes, chief global investment strategist at Ned Davis Research, said gold's gains could be fleeting as prices did not break above the 50-day moving average at $1,914.76 an ounce.
Hayes mentioned that if the U.S. dollar remains elevated, the team's investment recommendation for gold could be revised down from neutral to pessimistic. "The U.S. 3-year and 10-year Treasury yields remain relatively high and have been supporting the dollar, compared to most other currencies falling below their 50-day moving averages," he explained.
Analysts at Sevens Report Research pointed out that gold has risen recently as nominal and real yields fell and the dollar's gains took a break. But looking forward, gold is still in a downward trend, and real yields and the dollar will be the key. If the two climb higher, it will be difficult for gold prices to stay above $1,800 an ounce.
At GMT+8 09:50, spot gold is now at $1,850.44 per ounce.
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