The central bank is expected to soon taper its monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage-backed securities. The announcement is expected to happen in September, while taper should occur by the end of the year. However, analyst Peter Andersen feels pulling back this year would be a big mistake. The idea of a possible pullback has stocks tumbling.
Fed would make ‘very serious mistake’ tapering this year, analyst says
Andersen Management Capital CIO Peter Andersen said he doesn’t believe the Federal Reserve will taper bond purchases this year on FOX Business’ “Mornings with Maria” Thursday.
Andersen argued the move would be a “very serious mistake” amid the coronavirus pandemic and ongoing conflict in Afghanistan.
“In the face of the global uncertainty, the global pandemic, I would be very, very surprised if they actually did taper. I just don’t think that’s in the cards…”
You can watch the full interview, here.
CNN Business/Anneken Tappe
Fed fear is back, sending stocks lower
Don’t look now, but stocks are tumbling. Wall Street is looking at its second straight day of losses after the Federal Reserve suggested Wednesday it could ease off the stimulus gas as early as year-end.
So the investor angst continues, sending CNN’s Fear & Greed index back into “extreme fear” from “neutral” just two days ago.
Dow (INDU) futures are 0.9% lower, while S&P 500 (SPX) futures are down 0.8%. Nasdaq Composite (COMP) futures are down 0.6% about an hour ahead of the market open.
On Wednesday, the minutes of the Fed’s July 27-28 meeting showed that the central bank expects to soon taper its monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage-backed securities.
“Various participants commented that economic and financial conditions would likely warrant a reduction in coming months. Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year,” the minutes read.
Even though this is making investors nervous, it’s broadly in line with expectations. Plus, even tapered asset purchases would leave the Fed’s monetary policy rather loose.
Read the full story, here.
Kitco News/David Lin
Gold price holding steady as U.S. weekly jobless claims fall to new pandemic low
The gold market is holding steady and continues to test resistance just below $1,800 an ounce even as the U.S. labor market seeing significant improvement as fewer Americans than expected apply for first-time unemployment benefits.
Thursday the U.S. Labor Department said that weekly jobless claims fell sharply by 29,000 to 348,000, down from the previous week’s unrevised estimate of 377,000 claims.
“This is the lowest level for initial claims since March 14, 2020 when it was 256,000,” the report said
The latest labor market data was better than expected as consensus forecasts looking for claims to rise to 362,000.
The latest employment data is not having much impact on the gold market. June gold futures last traded at $1,792.20 an ounce, up 0.42% on the day.
The four-week moving average for new claims – often viewed as a more reliable measure of the labor market since it flattens week-to-week volatility – fell to 377,750 down by 19,000 claims from the previous week.
“This is the lowest level for this average since March 14, 2020, when it was 225,500,” the report said.
You can read the full story, here.