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Rate Hike Hammers Dollar; Stocks, Bonds, & Bullion Soar
Before we start, we want to point out that if the Atlanta Fed GDPNOW forecast of 0.9% for Q1 is correct, this will be the weakest economic backdrop for the economy for a rate hike since 1980!! (according to Bloomberg data).
All we can say is…
The reaction post-Fed was dramatic to say the least – the Dollar dumped and bonds, stocks, and bullion jumped higher in price…
VIX flash-crashed as The Fed statement hit…
The Dollar plunged to 6 week lows…this is the biggest daily drop in the Bloomberg dollar index since July 29th…
Emerging Market FX soared after The Fed – the best day since Feb 2016…
The Treasury yield curve steepened dramatically…
Gold outperformed post-Fed, as Bank stocks sank on the day…
Stocks all gained post-Fed, with Small Caps surging…
Thanks to a big short squeeze…
AUD is the big winner on the week as the USD got pounded…
Treasury yields remain higher since the first Fed hike in 2015 but notably (20bps flatter)…
Yields all tumbled across the curve after the rate-hike…
Dollar weakness sent commodities higher but they all remain lower on the month…
For now it appears what matters to The Fed is not 'hard' real economic data but 'soft' survey and confidence data…
Finally, we note that Goldman Sachs is down 8 straight days…
It has not suffered a longer losing streak since May 2008
Source: http://silveristhenew.com/2017/03/15/rate-hike-hammers-dollar-stocks-bonds-bullion-soar/
I have been managing funds for over 25 years in Europe. I told investors 3 years ago that it looked like “all old economic rules” did not work anymore and that new forces have taken over. First of all the massive unlimited “shadow-moneys from central banks”, the massive amounts of reported currencies by central banks, the massive out of whack derivatives market, the never ending manipulation of Gold and Silver markets, the interest rates . The high frequency traders have taken over the stock markets. Few stocks have been chosen to be of New World Order status: Amazon, FB,Apple,Tesla,Google/Alphabet. These stocks “seem” to be supported unrestricted. Esp Tesla and Amazon are being “grown” on an uneconomic. unrealistic basis. But the support is there for these companies. All the war mongering stocks are happy campers. The market is a rigged casino. Yesterday the FED raised interest rates. All “logical” reactions to the different markets were FOR ME upside down. The USDollar crashed, the bond, gold and stock markets rallied. The stocks of financials down (thought higher interest rates are good for good ole banksters?). I throw my hat in the air (full of chemtrails) and give up on financial forecasting. Cheerio