Traders and investors worldwide are on central bank alert this week. European Central Bank President Mario Draghi gave a dovish speech on monetary policy today by saying the ECB could cut interest rates and/or expand its bond-buying program (quantitative easing). Draghi’s comments came as dour trade data was released from the Euro zone today.
The Federal Open Market Committee (FOMC) meeting began this morning and ends Wednesday afternoon with a statement. Most believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. Many believe the ECB Draghi’s dovish comments today give the FOMC more leeway to lower rates.
The Bank of Japan also holds its regular monetary policy meeting this week.
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European and Asian stock indexes were mostly firmer overnight. The U.S. stock indexes are rallying solidly due in part to a tweet from President Trump saying he and Chinese President Xi had a good telephone conversation and will meet at the G-20 conference in Japan late next week.
Meantime, the yield on the benchmark German government 10-year bond fell to a record low of -0.299% today. World government bond yields are declining amid very low inflationary pressures in major economies and on slowing world economic growth.
Geopolitics is still near the front burner of the marketplace this week. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon. This situation is also inviting some safe-haven buying interest in the gold and silver markets.
The key “outside markets” today see Nymex crude oil prices solidly higher and trading just below $54.00 a barrel. Meantime, the U.S. dollar index is firmer and hit a two-week high today.
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Posted by :
Jack Dempsey, President
401 Gold Consultants LLC
jdemp2003@gmail.com