{"id":108216,"date":"2017-06-29T07:45:09","date_gmt":"2017-06-29T11:45:09","guid":{"rendered":"http:\/\/countingpips.com\/?p=108216"},"modified":"2017-06-29T06:45:52","modified_gmt":"2017-06-29T10:45:52","slug":"suddenly-central-bankers-turned-hawkish","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/06\/suddenly-central-bankers-turned-hawkish\/","title":{"rendered":"Suddenly Central Bankers turned hawkish"},"content":{"rendered":"
June 29, 2017<\/div>
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Article by ForexTime<\/a><\/p>\n

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Central bankers didn’t seem to have learned the lesson from the former Fed Chair, Ben Bernanke, when he first mentioned the idea of tapering the amount of money being pumped into the economy in May 2013.<\/p>\n

Back then, the news sent risk assets south, and the volatility index surged 63% in less than a month, while U.S. 10-year Treasury yields climbed 25%.<\/p>\n

Both, ECB\u2019s Mario Draghi, and BoE\u2019s Mark Carney sent a message to investors from Sintra, Portugal that the era of cheap money is closer to an end. This time the reaction was mainly felt in fixed income and currency markets.<\/p>\n

Draghi\u2019s comments were intended to signal more confidence in the economic recovery and not an immediate call to withdraw stimulus; however, bonds were sold heavily, and the Euro marched above 1.14, a new 52-weeks high. Similarly, Carney\u2019s remarks, sent the Pound to 1.2972, recovering all losses prior to PM failure to win a majority, as he indicated the possibility of raising rates. I think going forward central bankers will be more careful and cautious when passing on similar messages. In other words, they should be uninteresting not to disrupt financial markets.<\/p>\n

Although I\u2019m bullish on the Euro on the longer run, I think the market\u2019s reaction is a bit too exaggerated. I would rather wait for hard data to confirm the hawkish stance, especially inflation, because with the recent slide in oil prices inflation may remain low for a prolonged period. If Eurozone\u2019s headline and core CPI disappoints on Friday, there\u2019s a high chance that traders will book some profits.<\/p>\n

Financial stocks are the biggest beneficiaries from the surging yields and the Fed\u2019s upbeat assessment on the U.S. banking sector. The biggest U.S. banks are now able to boost shares buybacks and dividend payouts by almost 50% compared to 2016. This would likely lead to the continued rotation from bond proxies such as utilities to financials.<\/p>\n

In commodity markets, gold recovered most of Monday\u2019s losses to trade above $1,250 as the U.S. currency continued to weaken against its major counterparts. Meanwhile, crude prices were higher on both sides of the Atlantic despite U.S. inventories unexpectedly rose 118,000 barrels last week. The supporting piece of news from EIA was the 100,000 barrels decline in production last week, but it\u2019s too early to jump to conclusions at this stage as it’s likely to reverse in the weeks ahead.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Disclaimer: <\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Article by ForexTime Central bankers didn’t seem to have learned the lesson from the former Fed Chair, Ben Bernanke, when he first mentioned the idea of tapering the amount of money being pumped into the economy in May 2013. Back then, the news sent risk assets south, and the volatility index surged 63% in less […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-108216","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=108216"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108216\/revisions"}],"predecessor-version":[{"id":108232,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108216\/revisions\/108232"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=108216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=108216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=108216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}