Special attention was given to investors in the quarterly survey conducted by the Fed among its senior executives regarding their forecasts of economic growth, unemployment, inflation and base interest rates in each of the next three years. The results of the survey, published at the same time as the interest rate announcement, mainly indicated that in the last three months, almost no changes were made to the Fed’s forecasts for 2017-2019.Investors mainly examined the rate of interest rate hikes expected in the United States according to policy makers’ forecasts. On average, they maintained their December forecasts that in 2017 and in the two years thereafter, the base rate would rise at a rate of 0.75% per year until it stabilized at around 3% at the end. 2019.This assessment, which did not change, led to a sigh of relief and a positive immediate response in financial markets. US government bonds have jumped sharply, and the 10-year bond yield has fallen from 2.6% to 2.5%. The daily rise in the S&P 500 stock index strengthened from 0.35% to 0.84%, the gold up about 2%, while the dollar fell by about 1% against the other major currenciesIn Israel, too, the dollar has depreciated by about 1% against the shekel, at a rate of NIS 3.62 to the dollar, reflecting a three-year low. The Israeli government’s 10-year bond climbed 0.5% today, trading at a yield of 2.26%. Domestic stock indices, however, were content with only slight increases due to pressure on export stocks as a result of the dollar weakening.
Fed Waiting for Government Program”Given the reaction in the markets last night, it is likely that many US investors feared a change in forecasts, especially because the Fed’s average projections indicate expectations of accelerating interest rate hikes in the US – so that both in 2017 and in 2018 interest rates will be raised four times. Per year. That did not happen, but it is likely to happen later this year in light of the expanding fiscal policy the new Washington administration is planning. For now, the federal interest rate futures are aligned with the Fed’s forecast, pointing to two more increases in 2017 – one between June and September and the other in December. However, it should be emphasized that those contracts also indicated at the end of January a low probability of only 20% that interest rates would be raised in March.Idan Azulay, CEO of Epsilon Mutual Funds, said this morning that the fall in bond yields in the US could be indicative to some extent of the market’s impossibility in President Donald Trump’s ability to execute plans.”The Fed, like the market, has
not changed its growth forecasts, and is awaiting the administration’s concrete plan to stimulate the economy. However, the Fed adheres to its interest rate forecasts, due to the need to adjust the level of interest rates the US economy – which can make it difficult to implement the incentive programs. , If these involve increasing the deficit, “Azulay said.US economic television channels have been discussing the Fed’s monetary policy and economic impact this week. Robert Heller, who served on the Fed’s Board of Directors during President Ronald Reagan’s tenure, reiterated his interest rate decision that the Fed should move faster toward the long-term target of 3% .In an interview with CNBC, Heller said: “We have a very low unemployment rate of 4.7%, we have inflation of about 2%, so the interest rate should be normal now – and normal is
3%. Instead, we are below 1%.”Heller believes the Fed is currently behind the yield curve (Behind the Curve) – that is, the central bank is late in its response to economic changes and, consequently, has been caught in a situation where base interest rates are too low in relation to employment and inflation data.This is a seemingly dangerous situation, which could lead to inflation overheating and a more severe reaction from the Fed down the road, which could stifle the economy. This is especially true at a time when the Trump administration is planning huge billions of dollars of investment in improving US infrastructure and strengthening the military. Fed security has changed a lot “However, according to Jeffrey Gandleh, the director of Double-Line Capital, a risk of a US recession does not seem to be on the horizon today. Last summer there were some things that looked dangerous, but everything changed following the election, ”he told CNBC in an interview.Gandach also believes that the market has returned to its confidence in the Fed, and that in light of the strong economic data presented by the US economy, the US government’s short-term bond yields are expected. “Fed security has really changed a lot,” he said recently, contrary to his forecast for the market. The solid, then, in Gandal’s view, risk assets are now looking risky.The stock market may have been moving sideways lately, but technology monsters are currently breaking records. Apple, Google and Facebook set new closing highs yesterday, while Amazon is only 0.4% off its record set last month. Microsoft, too, is only 1.6% off its record in January.Rising highs also jumped the market value of those tech giants. Apple is now worth $ 735 billion, after jumping 21% from the start of the year, Google is worth $ 594 billion, up 10% over the same period, while Microsoft made up 4%, but is already worth $ 498 billion. Facebook and Amazon recorded
21% and 14% jumps, respectively, from early January – bouncing them beyond the $ 400 billion valuation threshold. Beige Book: US growth is low but consistentThe Federal Reserve is reviewing the economy of 12 countries, saying that the short-term optimism of business is moderating the beige book, the book reviewing the US economy of 12 states is being released ahead of the open market interest rate (FOMC) hearings held mid-month. That the economic growth that characterized the U.S. economy continues at low levels, but is consistent.Even before the book’s release but now more strongly, investors are reflecting a 60% interest rate hike in the upcoming session. These odds began to rise after last week the US president said he intended to make $ 1 trillion in US infrastructure. The Fed will not be able to resist and will probably be forced to raise interest rates already at the upcoming meeting, at least from interest rate trading contracts.The non-indifferent bond market, too, and the 10-year government bond yields are now up 6 points to 2.45%. When the shorter 5-year bond yields jump 5 points to 1.99%. Yellen testified in Congress – and government bond yields jumped 2.5%Despite a fairly routine statement that raising interest rates is possible in the upcoming session, the US bond market is responding aggressively, with yields rising by 5 points ■ Since the beginning of the month, US government bond yields have risen by 8 points Janet Yellen, chairman The Federal Reserve, testified Tuesday night before the US Congress Banking Committee. Yellen did not provide any significant headlines and in fact repeated her remarks in every possible forum from the recent period, but bond investors actually attach importance to Yellen’s statement that a possible interest rate hike is already at the upcoming open market conference. Investors currently estimate that the prospect of raising interest rates in the US is already a meeting. The upcoming FOMC is only 30%.10-year US Treasury yields jump by 5 points to 2.5% as early this month jumped 8 points. Macro data released today suggest that the US economy’s core data is positive and therefore the flow of money from the new government will require an interest rate hike Today, the US producer price index rose 0.6% last month, a significantly higher figure than December’s 0.3%, and forecasts by economists expect a 0.3% rise in January.
-0.4%, double the December figure and double the economists’ forecast.Yossi Levy, CEO of Moore Investment House, recently estimated in the Globes that the 10-year US government bond yield ranges from 2.4% to 2.5% until the political situation in the US stabilizes and traders can more effectively price the He says that once the 10-year bond passes the 2.6% level, the next level will be 2.8% -3%, and 3% have a long-term resistance line, and 3% are expected to enter particularly large institutions – global pension funds. , Who can buy corporate bonds with an investment rating of 4.5% to 5%. The Fed expects continued moderate growth – leaving interest rates unchangedFederal Reserve expects inflation to remain below 2% ■ Labor market continues to show steady growth Federal Reserve left US interest rate unchanged on Thursday – 0.5% to 0.75% range. When no objections were made to the move of the interest rate allowance was changed.In the Federal Reserve, they decided to wait for the real administration to start a new operation with the base forecasts unchanged. For example, the Fed’s inflation forecasts remain below 2%, the labor market continues to demonstrate with us and the overall growth of the US economy continues to be moderate, but the direction is growth.Yields on the bond market are volatile even though the Federal Reserve decision was expected. Yesterday, yields dropped, but after the Fed’s announcement of 10-year US government bond yields rose 3 points to 2.48%. Overall, the trend that has begun since Donald Trump was elected US president continues and money migrates from the bond market to the stock market with the premise that regulatory changes pushing them will lead to improved corporate performance which will generate profits for stock market launches.Lior Faust, Director of Forex Trading at Leumi Capital Markets: “The Fed is leaving interest rates as expected. And his statement, too, remains virtually unchanged. The markets, which expect two to three interest rate hikes in 2017, can be calm. Yellen didn’t ruin the party, which is no big deal.
The dollar, on the other hand, has reacted slightly, because the markets understand that at the level of political uncertainty inside and outside, it will be very difficult for the Fed to meet the expected path. The Fed did buy Trump’s optimism in December, but he did not marry her. On the contrary, the markets understand that the incoming president is putting in a great deal Of uncertainty for the Fed’s plans, keep in mind that there are only seven more interest rate announcements this year, so if the Fed wants to meet the three-rate path, it needs to make at least one in the first half of the year, and the statement we heard today does not eliminate that option, but neither does it. Strengthens it. “Uncle Reznik, Director of Macro Research at Leumi Capital Markets: “A routine announcement alongside cautious optimism;The first Fed announcement in the Trump era has more or less met market expectations. Interest rates remain unchanged after raising interest rates in the previous decision in mid-December. The Fed chooses to use cautious optimism when it manifests that the economy is growing at a moderate rate (proof that we received in the fourth quarter growth data) Of recently published 2016) alongside stability at the relatively high level of employment in the labor market (which, by the way, was also referenced today in the January ADP survey, which was relatively strong, pointing to higher job growth than private sector projections.) On the other hand, the inflation environment was still not at the target level of 2%, This prevents the Fed from stepping up in mass at this stage Tari.The Fed looks set to wait another period to review the actual steps the Trump administration will take before deciding on further interest rate hikes, which, as far as it is concerned, doesn’t seem to have changed much since the last interest rate decision. Thus, a script that presented a December 2-3 decision raising interest rates for The coming year will continue to be the main scenario, in the absence of more news,
and the market is currently clinging to the bottom of the Fed’s estimates, embodying two rate hikes in June and December 2017. The markets, after the announcement, are trading relatively steadily in the absence of new Fed monetary policy cues. “.The increase in repurchases, which also have tax advantages, has attracted the attention of politicians. In a February 2019 article, Chuck Schumer, chairman of the Democratic faction in the Senate, and Sen. Bernie Sanders in the New York Times wrote that they would advance legislation that would give the right to repurchase by purchasing the company to introduce things like a $ 15 minimum wage, seven Paid sick days, health and pension benefits, etc. As usual with politicians, populism comes first, and all the risk to the capital market and the economy as a result of massive debt purchases has gone unnoticed.One way or another, this is a dilapidated card tower based on continued debt growth, and nothing else. When the day comes when reality in the real economy blows across Wall Street, an event likely to happen even before Trump leaves the White House, this massive manipulation will turn into a landslide. And then, all those companies that put on huge debt to finance the repurchases will not only have to predict the collapse of their shares because of the inability to continue debt-financed purchases, but they will also have to deal with the debt load as the real economy slows their revenues.The unnecessary war that will not improve the condition of the American middle classAnother factor affecting the conduct of markets is of course the US-China trade war. But why did it even start and how is it going to end?For the last thirty years, the US-China trade has been about the same: American banks have made money in debt, the American public has taken the debt and bought it from the very cheap labor of Chinese workers. Thanks to this model, which is the center of Chinese workers who have earned a tenth and fewer of American workers, Americans have been endlessly endowed with consumer goods at zero cost, so the American “consumer” was born, and in the past three and a half decades, the huge shopping malls that are full of goodies have been set up, one that is now closing one by one. When Trump came to power, he preferred to focus on the narrative rather than the structural and difficult problems of America. After all, anyone like him knows that the narrative is what brings the votes, and not the very Sisyphean struggle to the military-industrial-financial-medical-agricultural-establishment in Washington DC, the same egg that promised to dry in the election campaign.Thus began the trade war with Canada and Mexico and then with China. In early 2018, Trump stated that “last year we lost $ 500 billion on trade with China. This will never happen again.”How can getting hundreds of billions of real hard-working products from hundreds of millions of Chinese for US dollars be considered a loss? And how does raising the prices of such products through caps improve the situation of American residents in general and Trump voters, the big losers of America’s financialization, in particular? To the God of Twitter solutions.In the meantime, the lids were again and again imposed, and now another threat was raised. The president probably thinks he can for
ce the Chinese to buy products they don’t need with money they don’t have. After all, China cannot print dollars, and its total trade balance, not just that of America, is more or less at zero today.Meanwhile, since the trade war flag with China was lifted and tariffs were imposed, US exports to China actually fell by 7% from $ 130 billion in 2017 to $ 120 billion in 2018, while imports from China actually increased by 11% from $ 506 billion in 2017 to $ 563 billion in 2018.And it is indeed about to end with a faint humiliation. A bombastic victory picture, some festive tweets and a party on Wall Street, and nothing more. Nothing real to improve the middle-class life of the United States, which does not enjoy the celebrations on Wall Street, will happen.
best deals for you: