Belgium Attacks Force Flight To Safety
March 22, 2016
The Fed Flip-flop continues, as once again they talk about rate hikes, just days after taking the prospect off the table. Overnight Fed members Lockhart and Williams said that a rate rise by the Fed could come as early as next month; “all else equal, assuming everything else is basically the same and the data flow continues the way I hope and expect, then April or June would definitely be potential times to have an increase on rates”. These comments once again drew investors towards the Dollar, though US stock markets manage to maintain a positive outlook and closed marginally higher by the end of the session.
Trying to get a handle on the Fed's intentions at the moment is pretty tough. Most central banks have no desire to raise rates and bring unwanted interest to their currencies – most in fact, would prefer to actively weaken their currencies to substitute for poor growth – so the Fed's continued 'will they-won't they' approach is a little counter intuitive. Unless, of course, they are more concerned that inflation gets away from them than they are of stifling a little growth. Either way, some clear guidance would be welcome.
Also out of the states; hedge funder and bond trader extraordinaire Jeffrey Gundlach has been speaking to Reuters and saying that he thinks a Trump nomination causes a global growth scare. He sees Donald Trump getting a step closer to the White House putting a ceiling on oil of $45 per barrel and an increase in Geo-political risk premium in the markets.
As we've been writing this morning we've been hearing reports out of Belgium that there have been explosions at the main airport, as well as gunshots. So far 11 are dead and 20 wounded, but seems this is still unfolding. As this news is emerging so markets in Europe are moving lower and risk aversion is hitting bonds and FX markets too. The rest of the day will be dominated by this.