Gold 1768,25
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EURUSD 1,2117
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DJIA 33874,50
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OIL.WTI 64,455
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DAX 15202
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Markets waited with great apprehension for the outcome of Wednesday’s Fed meeting. Even the slightest hint that the Fed is concerned about rising inflation would be enough to sharply dump all risky assets.
EURUSD
However, once again we have not heard any hints. The chairman of the Federal Reserve has pretended that there is no inflationary pressure on the economy. This allows a new $120 billion to be injected into the market every month.
More and more questions are being raised on the following point. The Fed started a quantitative easing programme in response to the coronavirus pandemic and the fall in GDP in 2020. But today things are different. GDP is rising and unemployment and business data are getting better and better. Then why do we need to print so much money, since everything is fine? The Fed Chairman responded that growth is visible in the economy, but it must be sustained and so far things are not so clear-cut.
At the same time another bubble is being inflated in the real estate market. Prices in many states have long surpassed the pre-crisis levels of 2008 and continue to rise. What this can lead to, we all remember very well.
It seems to us that all of the Fed chairman’s excuses are designed to hide the sad truth. That is that the main challenge is to buy new US debt (treasuries). Without the support of the Fed, interest on it would skyrocket, making it extremely expensive to service. In fact, the US government and the Fed are working in tandem and have no contingency plan.
As a result, there is no reason for the stock markets to fall and any corrections will still continue to be bought out.
03.00 China service sector business activity index in April
11.00 EU first quarter GDP
11.00 EU consumer price index for April
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