The Fed Tapering Has Already Begun

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Barron's 19 August, 2021 - 11:38am 10 views

When are the Fed minutes released?

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. federalreserve.govMinutes of the Federal Open Market Committee, July 27-28, 2021

What is taper in stock market?

Tapering is the reduction of the rate at which a central bank accumulates new assets on its balance sheet under a policy of QE. Tapering is the first step in the process of either winding down—or completely withdrawing from—a monetary stimulus program that has already been executed. InvestopediaTapering Definition

Asian markets mixed as Delta, Fed, China jolt recovery rally

INQUIRER.net 20 August, 2021 - 03:03pm

HONG KONG – Equity markets were mixed in Asian trade Friday with fears over the fast-spreading Delta variant, the Federal Reserve’s taper plans and China’s ongoing regulatory crackdown taking the wind out of the sails of the global recovery rally.

Investors have for more than a year sent valuations surging on the back of colossal government and central bank support as well as optimism that the rollout of vaccines will help fight back against the coronavirus and allow economies to reopen.

But, while inoculations continue to be administered and life is slowly returning to a semblance of normal, the virus mutation has forced experts to rethink their outlooks for growth as some countries reimpose containment measures and infection rates rise.

The prospect that the world may not emerge entirely from the crisis as early as hoped has knocked confidence in recent weeks, though the general view is that the end is still in sight.

Compounding the downbeat mood were minutes from the Fed’s July meeting that indicated it is likely to start winding down its ultra-loose monetary policy — the juice that has fuelled a long-running rally — by the end of the year.

A speech by Fed boss Jerome Powell at next week’s gathering of central bankers and finance chiefs at Jackson Hole, Wyoming, will be keenly watched for a taper timetable.

Still, analysts said the issue was just part of a range of issues absorbing investors now.

“Perhaps the best one can say is that the minutes were the straw that broke the camel’s back,” said National Australia Bank’s Rodrigo Catril. “We would attribute heightening concerns over the global growth outlook as the main cause for the turn in sentiment.

“Recent softer-than-expected Chinese economic data along with lockdowns/activity restrictions around the globe due to a rise in Delta infections have been simmering for sometime now (and) China’s regulatory/credit tightening drive has not helped either.”

And OANDA’s Edward Moya added: “Regardless of Fed tapering timing, growth is only getting pushed further out, but given the excessive froth in the market a pullback seems warranted.

“Even if the Fed signals next week that a formal taper announcement will be done in September, the economy will still be supported by low interest rates, at least eight months of a gradual tapering, and more fiscal support from the Biden administration.”

Referring to the Fed’s decision to wind back similar support eight years ago, he said: “Investors should not expect a similar 2013 taper tantrum, but a modest stock market pullback that will likely be bought into.”

Hong Kong fell more than one percent again, with Beijing’s drive to tighten its grip on the Chinese economy continuing to batter confidence and delivering a blow to market heavyweight Alibaba.

On Friday, Beijing passed a sweeping privacy law to prevent state and private firms from collecting sensitive information on people. The move comes after leaders clamped down on a range of industries — particularly tech giants — citing personal data issues as well as security and antitrust breaches.

Shanghai, Tokyo, Seoul and Wellington also fell, though there were gains in Sydney, Singapore, Taipei, Manila and Jakarta.

Investors were unable to track small gains on the S&P and Nasdaq that were helped by data showing US jobless claims fell more than expected last week.

“The Delta variant of Covid is significantly more serious than anyone is really even pricing into the market,” Hilary Kramer, of Kramer Capital Research, told Bloomberg TV. “We know that tapering is coming. We know that the market is getting tired.”

The dollar held on to recent gains against its major peers and other units, boosted by the prospect of better returns in the United States as the end of the Fed’s loose monetary policies sees rates edge up.

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,096.65 (break)

Hong Kong – Hang Seng Index: DOWN 1.3 percent at 24,985.83

Dollar/yen: DOWN at 109.67 yen from 109.72 yen at 2100 GMT

Pound/dollar: DOWN at $1.3621 from $1.3637

Euro/dollar: UP at $1.1684 from $1.1680

Euro/pound: UP at 85.75 pence from 85.53 pence

West Texas Intermediate: UP 0.5 percent at $64.03 per barrel

Brent North Sea crude: DOWN 0.1 percent at $66.41 per barrel

New York – Dow: DOWN 0.2 percent at 34,894.12 (close)

London – FTSE 100: DOWN 1.5 percent at 7,058.86 (close)

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Forex Today: Dollar takes break from Delta, Fed worries, cryptos climb, oil extends falls

FXStreet 20 August, 2021 - 01:52am

Here is what you need to know on Friday, August 20:

Markets have returned to a risk-off mood, mostly driven by rising covid cases in the US, Germany, Japan and other places. However, the dollar has stabilized, consolidating gains from previous days. Speculation about Fed tightening remains prevalent. Cryptocurrencies are holding onto high ground and oil extends its falls.

The Delta COVID-19 variant continues spreading rapidly in the US, overwhelming hospitals in some southern states and infecting three vaccinated US Senators. Worries about the rising death toll and the fact that the White House opted to open booster shots to all ages is causing concerns. 

The dollar has been consolidating its gains driven by Delta and also by the Federal Reserve's move toward a tapering announcement as early as September. Fed Chair Jerome Powell is scheduled to speak on Friday, August 27, during market hours. 

EUR/USD is struggling below 1.17 as Germany reported the highest number of daily coronavirus cases in three months. The locomotive of the eurozone also saw producer prices rise at a faster rate than expected. 

USD/JPY is under pressure below 110 as the yen receives safe-haven flows amid rising cases in Japan. China contributed to the damp mood by tightening its screws on tech companies with a new data distribution law. Moreover, the central bank refrained from cutting its interest rates. 

AUD/USD is struggling to hold onto 0.71 after restrictions in Sydney were tightened. Investors shrugged off Thursday's upbeat Australian jobs report. NZD/USD is battling 0.68 after New Zealand identified additional covid cases and extended its nationwide lockdown. 

Canada is set to report retail sales figures later in the day. USD/CAD is nearing 1.29 due to dollar strength and the tumbling down of oil prices. WTI is hovering below $64 at the time of writing. 

Cryptocurrencies have been consolidating their gains early on Friday with Bitcoin holding above $47,000 and Ethereum clinging to $3,200. 

More: Federal Reserve July Minutes: Tapering is a rate hike

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EUR/USD is trading below 1.17 but off the lows. The dollar is taking a break from its gains led by fears of tapering from the Federal Reserve and rising COVID-19 cases. German PPI beat estimates with 1.9% MoM. 

GBP/USD is trading close to 1.36, under pressure after the UK reported a plunge of 2.5% in Retail Sales, far worse than expected. The dollar is benefiting from safe-haven flows. Speculation about Fed tapering continues.

Gold edged lower on Thursday and slipped to three-day lows, albeit lacked any strong follow-through selling.  The US dollar shot to over nine-month tops in reaction to Wednesday's FOMC meeting minutes. COVID-19 jitters, the risk-off environment helped limit losses for the safe-haven metal.

Coinbase has gotten the green light to invest $500 million in leading cryptocurrencies to its balance sheet. The firm aims to be the first publicly traded company to hold Ether, DeFi tokens, and various digital assets.

The questions around the primary topic in world markets continue to grow.  Will the Fed announce the long-awaited taper of its bond program at its September meeting?

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