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U.S. gold mining stocks surged in pre-market trading, with Newmont Gold rising 4.6%, Anglo-Ashanti Gold up 1.6%, Sibanye-Stillwater up 2.4%, and Barrick Mining up 3.5%.The Bank of Japans accounts show no clear indication that last Fridays yen exchange rate movement was caused by government intervention.On January 26th, HSBC analyst Joey Chew stated that amid rising inflation and political turmoil, market concerns about Japans fiscal sustainability are causing the yen to experience a risk premium. With the election approaching, political parties have proposed consumption tax cuts, "but concrete plans to fill the funding gap are scarce." The authorities may need time and effort to rebuild public trust. During this period, foreign exchange intervention and other capital flow management measures may play a role. Given that both Japanese and US authorities have expressed concern about the yens performance, coordinated action in the short term seems possible. However, the experience of coordinated intervention in 1989-1990 suggests that US involvement should not be assumed to be a panacea for a weak yen. If intervention does occur, the current net short position size means its negative spillover effects may be more limited than when the Japanese Ministry of Finance last sold dollars in 2024.Germanys January IFO Business Expectations Index was 89.5, below the expected 90.3 and the previous reading of 89.7.Germanys January IFO Business Conditions Index was 85.7, below the expected 86 and the previous reading of 85.6.

The Devil Is In The Details: Gold Analysis - Federal Reserve Minutes

Larissa Barlow

Apr 07, 2022 10:33

Analyses of Federal Reserve Minutes 

While both the FOMC statement and Chairman Powell's press conference provide market participants with information about the FOMC's updated and revised monetary policy, it is the release of the minutes that provides investors with significantly greater clarity and understanding. The devil, as they say, is in the details.

 

The Federal Reserve issued the official minutes from its March FOMC meeting today, providing insight into the central bank's current plans to begin unwinding its balance sheet assets. Beginning in March 2020, the Federal Reserve will add around $4.6 trillion to its balance sheet by purchasing $120 billion monthly in mortgage-backed securities ($40 billion) and US Treasury securities ($80 billion), bringing their total to just over $9 trillion.

 

According to Federal Reserve Governor Lael Brainard, the Fed intends to employ a mix of interest rate rises and a quick run-off of the balance sheet to bring US monetary policy closer to neutral later this year.

 

However, the minutes released today imply that the Federal Reserve will unwind around $3 trillion over the next three years, reducing its $9 trillion balance sheet to $6 trillion. While the Fed appears to be indicating a quick runoff of its balance sheet, the reality is that the Federal Reserve's balance sheet will be nearly $2 trillion larger than it was prior to the epidemic.

 

"Participants continued their discussion on plans to reduce the size of the Federal Reserve's balance sheet in a manner consistent with the methodology outlined in the Committee's Principles for Reducing the Size of the Federal Reserve's Balance Sheet, announced following its January meeting."

 

Additionally, the minutes stated, "While no decision was made regarding the Committee's plan to reduce the Federal Reserve's balance sheet at this meeting, participants agreed that significant progress had been made on the plan and that the Committee was well positioned to begin the process of reducing the balance sheet's size as soon as after the conclusion of its upcoming May meeting."


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