Macro-News round-up:
#MarketNews
– US: Fed, Loretta Mester: Mester advocates against lowering interest rates prematurely without sufficient evidence of sustainable inflation, as it could jeopardize progress toward the 2% inflation target.
At the same time, she recognizes the potential risks of holding rates steady for an extended period, which might harm the employment mandate. Fortunately, the words that have affected the market seem to be the following: “I expect the Fed to gain the confidence to cut later this year”.
Subsequently, bond yields fell, the 10Y dropped 5.8bp to 4.10%, while the 2Y dipped 6.9bp, indicating increased investor interest in bonds. In addition, the EURUSD rebounded slightly and managed to move above 1.0750, trading at 1.0760 this morning.
– China: Ahead of the Chinese New Year, President Xi is expected to receive a briefing on the condition of the financial markets, which could have sparked ideas for a quick rescue plan. Chinese stocks had a massive increase. The CSI 300 increased by 3.48%, but the Hang Seng increased by more than 4%.
In Hong Kong, where an index of mainland businesses dropped 0.8%, the momentum was less strong. This erratic equities trading shows that investors are still not entirely convinced, and it also emphasizes the necessity for the government to take more forceful action in order to sustain the recovery of the developing markets. The hope that policies will be put in place by the government to assist the market is what is driving the current upswing.
– Geopolitics: The Biden administration’s bill, which combined the resolution of the conflict with the southern border of the United States and new funds for the war in Ukraine and Israel, has been rejected again by Congress. The administration is said to have tried again to get funding for the Ukrainian war by using the resolution of the border conflict as bait. President Biden blames Trump for this outcome: “All indications are this bill won’t even move forward to the Senate floor. Why? The simple reason: Donald Trump,” Biden said.
A CBS documentary entitled “Arming Ukraine” investigates how much of the funds sent in arms aid would end up on the front lines. The conclusion is shocking: 70% of the funds would not reach the Ukrainian army. CBS deleted a tweet related with this, but some users managed to capture it earlier and it has gone viral.
As a reminder, the Republican Party had long ago proposed creating an audit of the funds sent to Ukraine, as had been done for Afghanistan, but the Biden administration rejected the proposal. Money laundering?
The rumor I mentioned yesterday is confirmed. Journalist Tucker Carlson announced yesterday that he intends to interview with Russian President Vladimir Putin. Tucker explained on his networks that many citizens in the United States are unaware of what is really going on with the war in Ukraine, and that it is time for them to know the truth from the other side.
Bill Kristol, a neo-conservative who supported the invasion of Iraq, called on his social networks, in an attempt at censorship, for the journalist to be prevented from re-entering the United States until they find out what is going on. It is believed that this interview, if it goes ahead, could do devastating damage to the Biden administration in the public eye.
