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RSM Chief Economist Joseph Brusueras: Warsh delivered the right hawkish signals at the press conference and attempted to reinforce the Fed’s credibility in restoring price stability, while also enhancing his own credibility.U.S. stocks continued to decline after the Walsh press conference, with the S&P 500 falling 1%, its biggest drop since July 29, the Dow Jones Industrial Average down 1.65%, and the Nasdaq Composite down 0.6%.On September 17th, Federal Reserve Chairman Warsh declined to answer questions at a press conference regarding his interactions with US President Trump. Trump has been calling for lower interest rates in recent months. Warsh stated, "I have no comment on my discussions with the president." White House Council of Economic Advisers Chairman Christopher Phelan said on Tuesday that raising interest rates would be a "mistake."On September 17th, Federal Reserve Chairman Warsh stated that he would not disclose details of future interest rate decisions by the Federal Open Market Committee (FOMC). He said, "I am not responsible for providing forward guidance. Our decision today (to raise interest rates) is a carefully considered, serious, and responsible one. We have been preparing for and thinking about this decision for the past 110 or 120 days." Warsh also stated that this decision was not market-driven. He said, "Our decision today is based on our assessment of the current situation, our judgment of the employment trend, and our assessment of the strength of the economy. Sometimes, the market tries to anticipate our decisions. I watch market prices to see what information the market is sending. But todays decision is our own."On September 17th, Warsh stated that while the Federal Reserve cannot prevent price shocks in commodities such as oil on its own, the central bank can use policy tools to prevent further spread of inflationary pressures. Warsh said, "We cannot influence the price of any single commodity, such as oil or groceries." However, he pointed out, "We can and will ensure that any changes in relative prices do not spread further, and do not have second- or third-order effects on the economy. Thats our responsibility, and thats what were doing." Warsh made these remarks as U.S. diesel prices hit a record high due to the Iran war.

Silver Prices Dropped As the Dollar and Yields Were Under Pressure

Drake Hampton

Mar 31, 2022 10:20

Significant Insights 

  • Silver prices have remained quite stable.

  • The dollar has depreciated, losing its safe-haven status.

  • Yields declined as employment statistics indicated increased inflation fears.

  • Oil prices fell sharply in the aftermath of promising peace talks.

 

Silver prices were largely unchanged on Wednesday, finishing in the green. The GPD suggested an increase in economic growth of 7.1 percent, which bulls did not find impressive. Benchmark yields fell as bond spreads narrowed. Tuesday saw the end of the 5s-30s inversion. The inversion highlighted the prospect of a recession as a result of the Fed's interest rate hikes. Gold prices increased as the currency and Treasury yields fell. The dollar sank as the currency's safe-haven attraction waned and the Euro strengthened. Oil prices have risen as the US weighs more sanctions against Russia in areas critical to the country's invasion of Ukraine.

 

According to ADP's Private Payroll Report, private payrolls increased by 455,000 in March, above expectations. In March, economists predicted that 450,000 additional jobs would be generated. The preceding month's total was 486,000. The leisure and hospitality sectors added the most jobs, 161,000 in total. Despite a tighter labor market exacerbated by the Fed's aggressive stance, hiring remains healthy. This report comes just two days before the highly anticipated nonfarm payrolls report, which indicates job growth.

Technical analysis

Silver prices reached a high of almost $25.00, tested the 10-day moving average, and then fell to $24.80. While silver is now trading higher, the Russia-Ukraine peace talks indicate a downward trend. Critical US data and diminishing geopolitical uncertainties will cause the metal to fall. Additional weakness might result in a test of the 200-day moving average. The $26.00 level will be a litmus test, although bull prices are very certainly capped.

 

Support is located near the 50-day moving average at approximately 24.32. Near the downward sloping trendline near 25.7, resistance is seen. The short-term momentum went positive as a crossover buy signal was triggered by the fast stochastic.

 

The medium-term momentum is negative, as indicated by the histogram's negative correlation with the MACD (moving average convergence divergence). The MACD histogram's trajectory is negative but decelerating, indicating an upward trend in price movement.


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