Marc Chandler – All Eyes Still Fixed On Central Bank Rate Hikes And Inflation Expectations
Marc Chandler, Managing Partner at Bannockburn Global ForEx and Editor of the Marc To Market website, joins us to recap the corrective moves seen in most markets as a result of the hotter than expected CPI inflation reading, and expectations that the Fed will keep hiking rates longer and higher than initially expected.
Next we review the recent rebound in the US Dollar and move higher in interest rates off the back of this persistently high inflation news, that caught many traders wrong-footed. Even though other central banks are also starting to tighten, like the ECB last week and the Bank of England and Bank of Japan for next week, they are not moving as aggressively as the Fed, and so Marc sees room for the US dollar to run up to 117.50 – 120 before completing its bullish run higher. We wrap up looking forward to the next Fed rate hike next week, and after that the only data that is really going to move the needle is further inflation metrics.
Treasury Recommends Exploring Creation Of A Digital Dollar
Fatima Hussein – Associated Press – Fri, September 16, 2022
“The Biden administration is moving one step closer to developing a central bank digital currency, known as the digital dollar, saying it would help reinforce the U.S. role as a leader in the world financial system.”
Treasury Secretary Janet Yellen said one Treasury recommendation is that the U.S. “advance policy and technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared if CBDC is determined to be in the national interest.”
>> Quote by Thomas Jefferson On Central Banking
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
This quotation is often cited as being in an (1802) letter to Secretary of the Treasury, and/or later published in The Debate Over the Recharter of the Bank Bill (1809).
TJ knew what he was talking about. The Constitution is going to become moot if they continue down this phony money road and the Transfer of Wealth will continue under an authoritarian regime that won’t be worth the beans to blow them away. Bananas all around in the meantime. Somebody has to figure out what TJ and The Framers meant with a Constitution because you don’t get one with Sociopathic Leader that wants to be King. (See all Autocratic countries). You too could get a plane ride to Martha’s Vinyard.
Well-stated Lakedweller2. Not only is the Constitution under serious threat under that last few administrations, but the Central Banks continue to be an unchecked rot under the surface of the financial fabric of the system, and this will bleed over into depriving the very citizens of their quality of life as inflation erodes their purchasing power, back-stopping reckless government fiscal spending bills to feed corporate interests, lobbyist’s pet projects, and the growing nanny state.
People will become less and less free as these bills erode our civil liberties, and sadly, many of the lemmings will clap their hands like barking seals as freedom dies, having been hoodwinked that they are doing the best thing to bail out businesses, pass social justice BS policies, raise the debt ceiling ever higher, and make the population more and more dependent on the government (with the half the people already suckling on the government teat).
The Fed and ECB and Bank Of England and Bank of Japan and Bank Of China will all be there to backstop their respective nations reckless spending. It has been and still is a global race to the bottom in fiat currencies, with endless erosion through inflation of the money supply, and yet main stream financial media cheers this one wanting more and more economic heroine. Again, sadly people have been embracing this lunacy and intervention with open arms, so they’ve made their beds, and now the citizens will need to lay in it.
It’s possible that the Bank of China should be included here, but recent moves suggest otherwise:
“The trend toward the de-dollarization of regional economies is already underway. We see how countries, including China and Russia, are diversifying their foreign exchange reserves, increasing investments in other currencies, and switching to settlements in national currencies. The intent is to reduce their dependence on the world’s main reserve currency – the U.S. dollar – and for good reasons.
“But why are more countries striving to switch to settlements in national currencies? Well, the most active participants in de-dollarization are China and Russia. The conflict in Ukraine has had an impact on Russian markets and the ruble, but it didn’t stop its trade with China since a growing percentage of business is done with the Chinese yuan. The de-dollarization in settlements between other regional states has gained momentum, since the yuan is being used by large companies with state participation, such as producers of energy resources and agricultural products.
“The trade and tariff wars have had a negative impact on business worldwide and the negative consequences of this are felt both by direct and indirect participants. The U.S. is gradually losing its advantage and position in world markets. Trade and tariff wars, as well as the application of sanctions by the U.S. have hindered economic integration of the country and the world economy as a whole. In a multipolar world, a multipolar currency is required, and the only way out of this situation would be negotiations and unity in purpose at the SCO.”
What puzzles me about China is its apparent slave-like adherence to extreme pandemic strictures. Time will tell (probably not Joe, though). – BDC
Related commentary: https://www.youtube.com/watch?v=cXt5U6y7z-w
The Dollar Heads into the Weekend Well Bid
Marc Chandler – Marc To Market – September 16, 2022
“The dollar is well bid. It has risen to new two-year highs against the dollar bloc and Chinese yuan. Aided by worse than expected retail sales, sterling, on its anniversary of leaving the European Exchange Rate Mechanism fell to its lowest level since 1985. This fits into the broader risk-off move. The S&P 500 fell to new two-month lows yesterday, and FedEx warnings after the bell yesterday add to the string of worrisome comments from leading US corporates.”
“Bonds are heavy, and benchmark 10-year yields are of 2-5 basis points in the US and Europe. The US 10-year is approaching 3.5%. Gold is no match for the stronger dollar and higher rates. It has been sold to new two-year lows today near $1654. After falling nearly 4% yesterday, December WTI is steady now, hovering around $84. The US is avoiding a railroad strike, and this weighed on US natgas prices. They fell 8.7% yesterday and are off another 3.25% today.”
“Europe’s benchmark fell 2.7% yesterday and is off 7.7% today. Asia Pacific equities bled lower. The Nikkei, Shanghai and Shenzhen, Australia, and Index fell 1%-2% today.”