On Wednesday, Eastern Time, the international gold price fell slightly, still hovering below US$1,800. As of closing,The most active August gold futures price on the New York Mercantile Exchange gold futures market fell by 0.1 US dollars on the 28th from the previous trading day to close at 1,799.7 US dollars per ounce, a decrease of 0.01%.
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The Fed keeps interest rates unchanged, in line with expectations, gold prices recover after a short-term decline
Wednesday (July 28) New York session, at 2 o’clock in the morning Beijing time on Thursday,MidlandChu announced the latest Julyinterest rateresolution,MidlandReserve maintenanceinterest rate0-0.25% unchanged, in line with expectations.
From this timeMidlandAccording to the statement of the Reserve Bank’s resolution, the Fed’s wording maintains a relatively neutral tone, emphasizing that it will continue to maintain the current bond purchase policy and that inflation is only temporary. However, the Fed also indicated that economic activity and employment conditions continue to increase, which may be detrimental to gold prices in the short term. At present, the focus of the market has turned to the speech of the Fed Chairman Powell later, in order to find some clues to the future direction of the policy from the speech.
After the announcement of the resolution, the spot gold price fell back by 7 US dollars in a short-term, the US dollar index rose by 26 points, and other non-US varieties declined to varying degrees. However, after the market fully digested this resolution, the price of gold later recovered its decline and turned up. The overall trend relapsed into a shock range.
The specific content of the Fed resolution statement
currencyIn terms of policy, the Federal Reserve kept the benchmark interest rate unchanged at 0%-0.25%, which was in line with market expectations. Keep the excess reserve interest rate (IOER) unchanged at 0.15%. Keep the discount rate unchanged at 0.25%. It will continue to increase its holdings of at least US$80 billion in national debt and at least US$40 billion in mortgage-backed securities each month until the committee’s goals of full employment and price stability have made substantial progress. (Consistent with the last meeting)
Fed will reverse overnightRepurchaseThe interest rate (ON RRP) remains unchanged at 0.05%. The Federal Reserve has established a domestic and foreign permanent repurchase mechanism. The permanent repurchase tool will carry out daily overnight repurchase operations on Treasury bonds, institutional debt securities and institutional mortgage-backed securities. The Federal Reserve believes that the current overall financial situation remains accommodative and continues to be committed to using all tools to support the US economy.
In terms of economic prospects, the Federal Reserve pointed out that economic activities and employment conditions continue to increase. The US economy has made progress towards the goal of reducing quantitative easing. Industries affected by the epidemic have not yet fully recovered. Progress in vaccination may continue to reduce the impact of the public health crisis on the economy, but the economic outlook remains at risk.
In terms of inflation, the Fed still believes that the increase in inflation largely reflects the impact of temporary factors. Seek to achieve inflation that is moderately higher than 2% for a period of time, so that the average long-term inflation can reach 2%, and the longer-term inflation expectations are still firmly anchored at 2%.
In terms of the labor market, it is appropriate to maintain this interest rate target range until labor market conditions have reached a level consistent with the Committee’s assessment of full employment, and the inflation rate has risen to 2% and will surely exceed 2% moderately for a period of time. of.
The committee members unanimously agreed to this interest rate decision. (Consistent with the last meeting)
Fed rate hike probability statement remains consistent before and after
Before the FOMC statement, the probability that the Fed will maintain interest rates in the 0%-0.25% range in July is 100%, and the probability of raising interest rates by 25 basis points to 0.25%-0.50% is 0%; the Fed will maintain interest rates at 0%-0.25 in September The probability of the% interval is 100%, and the probability of raising interest rates by 25 basis points to the 0.25%-0.50% interval is 0%; the probability of maintaining interest rates in the 0%-0.25% interval in November is 100%, and the probability of raising interest rates by 25 basis points Is 0%.
After the FOMC statement, the probability that the Federal Reserve will maintain interest rates in the 0%-0.25% range in September is 100%, and the probability of raising interest rates by 25 basis points to 0.25%-0.50% is 0%; in November it will maintain interest rates at 0%-0.25%. The probability of the interval is 100%, and the probability of raising interest rates by 25 basis points is 0%. Consistent with before the statement!
In terms of market commentary,AnalystChris Anstey pointed out that the foreign repurchase tool essentially perpetuates a temporary plan set up by the Fed when it faced extreme pressure last year. At that time, foreign central banks dumped U.S. Treasury bonds and bought U.S. dollar cash. The repurchase mechanism allows them to quickly obtain U.S. dollar cash from the Federal Reserve without selling securities. Judging from the minutes of the June meeting, Fed officials seem to have no argument about making this policy permanent.
Chris Anstey pointed out that the scope of the new permanent repurchase tool is very wide, and it will accept not only government bonds but also mortgage bonds. Mortgage securities currently seem to be regarded as the core of the Fed’s operations. The permanent repurchase facility will also not only apply to primary dealers, but also “will expand over time to include more depository institutions.” This was a theme discussed at the Fed meeting in June. Former Treasury Secretary Geithnar’s group previously called for a wider range of participants, not just primary dealers.
Uncertainty of mutated virus epidemic pressures global economy
This week, affected by the counter-attack of the epidemic, the economic prospects and policy trends of the United States and other countries are facing uncertainty, which has increased the complexity of the timing and pace of policy transformation.
internationalityMonetary FundThe Organization (IMF) released the updated content of the “World Economic Outlook Report” on the 27th, maintaining the global economic growth forecast for 2021 at 6%, but warning that the global economic recovery will be intensified due to the different ability to obtain the new crown vaccine.
The IMF pointed out in the report that the lower-than-expected popularity of the vaccine has caused the new coronavirus to continue to mutate and spread, which in turn causes the global economic recovery to face downside risks. Since the release of the “World Economic Outlook Report” in April, the global economic outlook has further diverged, and differences in vaccine availability have led to the division of economic recovery into two camps.
Among them, economic activities in developed economies with more adequate vaccine supplies are expected to return to normal later this year. However, economies with a shortage of vaccines will face a rebound of the epidemic, a rise in confirmed cases and deaths, and other situations that are not conducive to economic recovery. At the same time, even in countries and regions with very low infection rates, economic recovery is still uncertain because the epidemic is still spreading on a global scale.
Compared with the “World Economic Outlook Report” released in April, the updated content raised the growth forecast for developed economies by 0.5 percentage point to 5.6%, and lowered the growth forecast for emerging markets and developing economies by 0.4 percentage point to 6.3%.
IMF chief economist Gita? Gopinath said that differences in vaccine availability and policy support are the two main reasons for the increased differentiation of the global recovery. The international community should adopt multilateral cooperation to ensure more convenient access to vaccines on a global scale and rapid diagnosis and treatment of new crown cases. At the same time, it is necessary to ensure that financially-strapped economies maintain access to international liquidity.
Economists believe that U.S. economic growth will slow in the third quarter
Economists generally believe that US economic growth will slow down from the third quarter and enter a more moderate expansion phase.
A few days ago, the World Large Enterprise Research Association issued a forecast that the US economic growth rate will reach 9% in the second quarter of this year, and will slow down to 7.8% and 4.2% in the third and fourth quarters. The annual economic growth is expected to grow by 6.6%. In 2022 and 2023, the economic growth rate will further slow down to 3.8% and 2.5%. The current U.S. economic growth is facing more constraints than expected. On the one hand, supply bottlenecks restrict the production of goods; on the other hand, the lack of labor is restricting the expansion of service industry consumption.
Economists believe that American companies will continue to face difficulties in recruiting workers due to the rebound of the epidemic and the reduction of unemployment benefits and the reduction of employees’ enthusiasm for going out to work. According to statistics from the American Chamber of Commerce, industries such as education, health care, professional technology, and business services are most affected by labor shortages.
Economists generally predict that the growth rate of the U.S. economy in 2021 is likely to peak in the spring. For the rest of this year and even 2022, although the growth rate is still strong, the rate will slow down a lot.
These economists pointed out that the combination of more and more companies restarting, the rising vaccination rate, and the US government’s aid to the epidemic caused the US consumer spending to rise sharply this spring, becoming the number one growth engine of the US economy. However, at present, the momentum of this explosive economic growth has begun to ebb.
Economists expect that the US economy will continue to grow solidly in the coming year, and its driving force will mainly come from the progress of employment, the release of accumulated savings, and continued financial support. From a longer-term perspective, they expect that the US economic expansion will gradually cool down and eventually enter a more stable post-epidemic era.
The Fed’s report on the national economic situation released on the 14th of this month shows that supply chain disruptions have become more common in the past two months. Some companies have delayed expansion or reduction of service scale due to lack of labor. Most companies expect input costs and sales prices in the next few months. Will climb further.
Bank of AmericaOf economists have lowered the US economic growth forecast for this year to 6.5% from the previous 7%.Goldman SachsIt also lowered the US economic growth forecast for the second half of this year, and lowered the economic growth rate in the third and fourth quarters by 1 percentage point to 8.5% and 5.0%, respectively.Goldman SachsAt the same time, the U.S. unemployment rate at the end of 2021 is expected to be raised from 4.2% to 4.4%.
Peter Chatwell, director of multi-asset strategy at Mizuho International, said that as the recovery becomes more mature and common, and inflationary pressures increase, we are in a state of decelerating US economic growth.
In addition, the debt problem of the United States has once again surfaced. On August 1, the US debt ceiling will come into effect again. Before the passage of the new debt ceiling bill, the Ministry of Finance will no longer be able to issue new debt, and can only use the TGA account balance and the US$ 832 billion provided by “unconventional measures” for government spending and old debt repayment.
If the debt ceiling problem is not resolved in the next 2 to 3 months, the US government will face the risk of technical default.
(Article Source:Oriental wealthResearch center)
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