Investors Trust Yellen and Powell, Kai’s Market Commentary
Johannsen
Frankfurt (ots) – The markets celebrate the arrival of Joe Biden as the new one
President of the United States. They not only associate hope with him
that much of what his predecessor Donald Trump did is now
is reversed, but also that the world’s largest economy in
quickly gaining a foothold in economic terms.
And here market participants also rely on the designated US Treasury Secretary Janet
Yellen, who is no stranger to the markets. Because Yellen headed from 2014
the US Federal Reserve until 2018. She was really into it then
careful not to cause any damage to the economy and like that
interest rate hikes to be initiated at the time. In view she had
the economy of their own country, the situation on the labor market, the
economic health of emerging markets and whether this is an interest rate hike
the US can cope with; the situation in China was just as important to them as
geopolitical tensions or the state of financial markets, currencies or
Commodity prices. Time and again the rate hike has been referring to an or
postponed several of these and other factors and preferred to wait.
From this, the markets derive their expectations of Yellen as finance minister
ab, the first in US history. Your attitude will be pro-economic
is the conviction of a wide range of investors. Under the Trump administration
was a $ 900 billion stimulus package at the turn of the year
adopted. And Biden put in an even bigger program shortly afterwards
View. 1.9 trillion Dollars are supposed to be taken in hand to help
economic damage caused by the pandemic
fight. At a hearing in the US Congress, Yellen insisted that it should now
Time to “act big” to save the economy, and
advertised the trillion dollar economic aid. She doesn’t want to move around until later
take care of the debts that will inevitably arise in this context.
So there is strong support from Yellen for the economy – the current one
Judging by words. That they did business-friendly actions in their words
follows, she has already demonstrated enough as head of the central bank
posed. The announcement of these plans put the markets in a buying mood. At
the stock markets are even in a record mood.
Yellen will get support from her former employer: the Fed.
Higher government spending, also financed by debt, should follow the classic
Reading lead to inflation rises in the longer term and then also the
Call the currency watchdog on the scene. That would mean the base rate in the
USA should increase in the medium to longer term. So that would be
Getting into debt for the US is associated with higher interest costs. Nobody knows yet
what volumes of government spending to cope with the pandemic
Economic misery is required. It is quite possible that the markets will soon
speculate about the expansion of these programs. Much depends on
the effectiveness of the vaccination programs that have been started and how the
economic recovery on the basis of the now discussed and then later on
will shape the programs that have been launched. How fast and how much does it pull
Companies invest in how quickly and how intensely revived
the consumption of private households? Does it even come to that
Development of inflation and does the Fed have to react as a result? That can be done today
do not answer yet. In addition: Wouldn’t many central bankers be happy if they
Inflation would finally pick up more clearly – over 2 percent?
It’s hard to imagine that the current US Federal Reserve Chairman, Jerome
Powell, the stimulus measures of his predecessor Yellen
Will put obstacles in the way in the form of higher key interest rates. A stall of the
He will certainly not want to risk stimulation measures and will do so
He was also very cautious about his statements in this regard in the coming months
fail in order to avoid any increase in yields on US Treasuries
to let. A taper tantrum (repatriation of bond purchases) that the
Bank of America’s fund manager survey recently highlighted a risk factor,
is probably not to be feared. Powell is closer to Yellen’s policy
accompany benevolently, ie the Treasury returns are not too strong
increase. In combination, that is the Janet-and-Jerome-Put (J & J-Put).
This will have an impact. It will prop up stocks and depress bond yields.
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