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The Dow Jones Industrial Average turned negative again, as did SanDisk (SNDK.O) and Micron Technology (MU.O), which had previously risen by more than 2%.The Atlanta Feds GDPNow model maintains its forecast for real GDP growth in the second quarter at 1.7%.French Foreign Ministry: The Chargé dAffaires ad interim of the Russian Embassy in Paris was summoned by France on July 17.July 17 – The Pakistani military issued a statement on the 17th, saying that Pakistani security forces killed 24 terrorists in an operation in the northwestern Khyber Pakhtunkhwa province in the past 24 hours. The statement said that attacks by the Pakistani Taliban against police officers have surged recently, and the killed terrorists are suspected of involvement in multiple terrorist attacks and acts of violence. The statement added that security forces seized a large quantity of weapons and ammunition during the operation, and the clearing operation is still ongoing.July 17th - The cost of hedging against dollar volatility has fallen to its lowest level this year. This week, the one-month implied volatility index for the dollar spot index fell to its lowest level since December last year, a significant decline from the surge following the outbreak of the Iran-Iraq conflict in March. This indicates that despite the uncertain outlook for Federal Reserve policy and the resurgence of conflicts in the Middle East, traders still believe that the likelihood of a major unexpected event impacting the global reserve currency is extremely low. This calm market situation reinforces a key feature of the market this year: the resilience of the US stock market and the reduction in currency volatility have encouraged investors to flock to carry trades, which profit from interest rate differentials and tend to perform best when exchange rates and risk appetite remain stable. Francesco Pesole, a foreign exchange strategist at ING, said the decline in dollar volatility is "remarkable." He noted, "The resilience of the stock market, supported by the AI boom, seems to be stabilizing the exchange rate and helping to maintain a self-reinforcing environment of low volatility and thriving carry trades." He added that even if tech stocks experience a pullback, this trading strategy will remain popular.

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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