Latest news with #BloombergDollarSpotIndex
Yahoo
2 days ago
- Business
- Yahoo
The Dollar's Collapse Party Might Be Ending -- HSBC Says the Real Bubble Is Forming Now
After an 8% slide in the Bloomberg Dollar Spot Index this year, investors seem convinced the dollar's pain is far from over. But HSBC (NYSE:HSBC) isn't buying the euphoria. In a fresh note to clients, Paul Mackel and his team flag signs of what they call a growing anti-USD bubblea mirror image of the bullish dollar wave seen just a few years ago. With traders extrapolating recent weakness into the future, HSBC believes sentiment may be tipping into crowd-think territory. Warning! GuruFocus has detected 6 Warning Sign with HSBC. The dollar's fall has been fueled by U.S. tariff drama, rising global de-dollarization talk, and general unease around Washington's policy direction under Trump. But HSBC notes that some of the initial catalystslike the shock from the April tariff announcementare now old news. What's more, historical correlations between the dollar and U.S. yields are starting to re-emerge, which could be an early sign that the dollar is bottoming out. Equities and yields are also moving in tandem again, hinting at a broader return to fundamentals. Still, the bears aren't out of ammo just yet. HSBC highlights scenarios that could keep the pressure on: more policy chaos, a faster-than-expected global rebound, or even leadership changes at the Fed. While none of these are base case assumptions, Mackel's team urges investors to stay alert. Bubbles don't last forever, they wrote. And if this really is an anti-dollar bubble, the unwinding could be just as sharp. This article first appeared on GuruFocus.
Malaysian Reserve
3 days ago
- Business
- Malaysian Reserve
Markets rattled by ‘credible threat' of Trump trying to fire Powell
ONCE again, President Donald Trump demonstrated his power to shake up global financial markets. This time, by returning to one of his favorite topics: whether to fire Federal Reserve Chair Jerome Powell. In an echo of the havoc that Trump unleashed with his trade war in early April, markets were briefly turned upside-down on Wednesday after a White House official said the president was likely to soon remove Powell. Stocks, the dollar and long-term US government bonds quickly retreated, while short-term Treasuries rallied on speculation that whomever Trump appoints to replace Powell will bend to the president's will and cut interest rates. Yet in less than an hour, the moves unwound after the president downplayed the possibility, saying he was 'not planning' to fire Powell, someone he's been lobbing almost daily criticisms at for moving too slow. By most measures, the markets' reaction was relatively muted, in no small part because of Trump's penchant for bluffing — not to mention questions about whether a US president has the legal authority to actually remove a Fed chair whose interest-rate policy he dislikes. But the message that markets sent was clear. To many, the initial moves reflected a deep-seated uneasiness that Trump will do what had long been unthinkable: That by firing Powell, he will end the Fed's decades-long independence in setting monetary policy, and in the process risk stoking a surge in inflation. 'The markets are taking this as a credible threat,' said Joe Gilbert, portfolio manager at Integrity Asset Management. 'This is unsettling and it remains to be seen if this is just a trial balloon by Trump to gauge market sentiment if indeed he follows through with firing Powell. Ultimately, we believe the legal hurdles will be too substantial to remove Powell.' To some observers like Wells Fargo macro strategist Erik Nelson, the reaction in major asset classes may convince the administration that firing Powell will not prove to be a panacea for the economy and markets. The yields on two-year Treasuries, one of the securities most sensitive to the Fed's benchmark policy rate, declined as much as 8 basis points while the rate on the 10-year note trimmed a drop of five basis points. The Bloomberg Dollar Spot Index erased a gain of 0.2% to drop as much as 0.7%. The S&P 500, which was up as much as 0.3% early in the session, dipped as much as 0.7%. Much of those knee-jerk moves quickly reversed after Trump made it clear that Powell's firing was not imminent. For some, like Bill Gross, the co-founder and former chief investment officer of Pacific Investment Management Co., the timing is less important than who is named to replace Powell. 'If he can sway the committee's thinking over time, bond markets will increasingly go curve positive, the dollar will weaken,' he wrote in a post on X. Investors wake up! The timing of the new Fed chair is less significant than the influence he will have on his committee. If he can sway the committee's thinking over time, bond markets will increasingly go curve positive, the dollar will weaken, and inflation will likely move to… — Bill Gross (@real_bill_gross) July 16, 2025 Many have expressed concern that even broaching the subject was potentially disruptive to the stability of US markets that have long relied on a central bank that is free from political influence. JPMorgan Chase & Co. CEO Jamie Dimon said on the bank's earnings conference call on Tuesday that the Fed's continued independence is 'absolutely critical' and meddling with the central bank 'can often have adverse consequences.' While Trump told reporters in the Oval Office that 'no, we're not planning on doing anything,' his comments left open the possibility of an attempt to oust Powell for cause. While Trump and his allies have lambasted Powell for most of the year over the central bank's decision to hold interest rates steady, lately they have seized on the swelling cost of renovations to the central bank's Washington headquarters. Asked Tuesday if the renovation price tag amounts to a fireable offense, Trump said: 'I think it sort of is.' 'Just threatening to 'fire' him is a bad precedent,' said Kathy Jones, chief fixed income strategist at Charles Schwab & Co.. 'It sends the message that 'Hey, I'm willing to break all precedent and cross that line to get what I want.'' George Saravelos, Deutsche Bank's global head of FX strategy, said in a report over the weekend that if Trump were to force Powell out, the subsequent 24 hours would probably see a drop of at least 3% to 4% in the trade-weighted dollar, as well as a 30 to 40 basis point fixed-income selloff. For now at least, the markets appeared to take Trump at his word that he wasn't about to soon take action to replace Powell before his term is up next year. Yet investors were left gaming out the various scenarios that may unfold if he did. 'What does it mean for markets? Lower market confidence, more rate cuts priced, weaker USD and higher term premium,' Jordan Rochester, head of macro strategy for EMEA at Mizuho International Plc., wrote in a note. 'Trump's denial has stopped the pace of the move but folks now need to consider the possibility in the months ahead.' Thierry Wizman, global foreign-exchange and rates strategist at Macquarie Group, added that 'the first order of business for traders is to bet on a steepening yield curve in the US. From a more structural long-term perspective, it also means the Fed may pay less attention to inflation and be more fiscally-captured.' Of course, for some veteran traders accustomed to the market whiplash that often accompanies conflicting news flow out of the Trump White House, it was just another day in the office. 'You can go crazy if you try to trade around these headlines,' said Leah Traub, a partner and portfolio manager on the global rates team at Lord Abbet. 'We stood pat.' –BLOOMBERG
Business Times
3 days ago
- Business
- Business Times
Markets rattled by ‘credible threat' of Trump trying to fire Jerome Powell
[NEW YORK] Once again, US President Donald Trump demonstrated his power to shake up global financial markets. This time, by returning to one of his favourite topics: whether to fire Federal Reserve chair Jerome Powell. In an echo of the havoc that Trump unleashed with his trade war in early April, markets were briefly turned upside-down on Wednesday (Jul 16) after a White House official said the president was likely to soon remove Powell. Stocks, the US dollar and long-term US government bonds quickly retreated, while short-term Treasuries rallied on speculation that whoever Trump appoints to replace Powell will bend to the president's will and cut interest rates. Yet in less than an hour, the moves unwound after the president downplayed the possibility, saying he was 'not planning' to fire Powell, someone he's been lobbing almost daily criticisms at for moving too slow. By most measures, the markets' reaction was relatively muted, in no small part because of Trump's penchant for bluffing – not to mention questions about whether a US president has the legal authority to actually remove a Fed chair whose interest-rate policy he dislikes. But the message that markets sent was clear. To many, the initial moves reflected a deep-seated uneasiness that Trump will do what has long been unthinkable: That by firing Powell, he will end the Fed's decades-long independence in setting monetary policy, and in the process risk stoking a surge in inflation. 'The markets are taking this as a credible threat,' said Joe Gilbert, portfolio manager at Integrity Asset Management. 'This is unsettling and it remains to be seen if this is just a trial balloon by Trump to gauge market sentiment if indeed he follows through with firing Powell. Ultimately, we believe the legal hurdles will be too substantial to remove Powell.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up To some observers, such as Wells Fargo macro strategist Erik Nelson, the reaction in major asset classes may convince the administration that firing Powell will not prove to be a panacea for the economy and markets. The yields on two-year Treasuries, one of the securities most sensitive to the Fed's benchmark policy rate, declined as much as eight basis points while the rate on the 10-year note trimmed a drop of five basis points. The Bloomberg Dollar Spot Index erased a gain of 0.2 per cent to drop as much as 0.7 per cent. The S&P 500, which was up as much as 0.3 per cent early in the session, dipped as much as 0.7 per cent. Much of those knee-jerk moves quickly reversed after Trump made it clear that Powell's firing was not imminent. For some, such as Bill Gross, the co-founder and former chief investment officer of Pacific Investment Management, the timing is less important than who is named to replace Powell. 'If he can sway the committee's thinking over time, bond markets will increasingly go curve positive, the US dollar will weaken,' he wrote in a post on X. Many have expressed concern that even broaching the subject was potentially disruptive to the stability of US markets that have long relied on a central bank that is free from political influence. JPMorgan Chase CEO Jamie Dimon said on the bank's earnings conference call on Tuesday that the Fed's continued independence is 'absolutely critical' and meddling with the central bank 'can often have adverse consequences.' While Trump told reporters in the Oval Office that 'no, we are not planning on doing anything', his comments left open the possibility of an attempt to oust Powell for cause. While Trump and his allies have lambasted Powell for most of the year over the central bank's decision to hold interest rates steady, lately they have seized on the swelling cost of renovations to the central bank's Washington headquarters. Asked on Tuesday if the renovation price tag amounts to a fireable offence, Trump said: 'I think it sort of is.' 'Just threatening to 'fire' him is a bad precedent,' said Kathy Jones, chief fixed income strategist at Charles Schwab. 'It sends the message that 'Hey, I'm willing to break all precedent and cross that line to get what I want.'' George Saravelos, Deutsche Bank's global head of FX strategy, said in a report over the weekend that if Trump were to force Powell out, the subsequent 24 hours would probably see a drop of at least 3 to 4 per cent in the trade-weighted dollar, as well as a 30 to 40 basis point fixed-income sell-off. For now at least, the markets appeared to take Trump at his word that he was not about to soon to take action to replace Powell before his term is up next year. Yet investors were left gaming out the various scenarios that may unfold if he did. 'What does it mean for markets? Lower market confidence, more rate cuts priced, weaker USD and higher term premium,' Jordan Rochester, head of macro strategy for EMEA at Mizuho International, wrote in a note. 'Trump's denial has stopped the pace of the move but folks now need to consider the possibility in the months ahead.' Thierry Wizman, global foreign-exchange and rates strategist at Macquarie Group, added that 'the first order of business for traders is to bet on a steepening yield curve in the US. From a more structural long-term perspective, it also means the Fed may pay less attention to inflation and be more fiscally-captured.' Of course, for some veteran traders accustomed to the market whiplash that often accompanies conflicting news flow out of the Trump White House, it was just another day in the office. 'You can go crazy if you try to trade around these headlines,' said Leah Traub, a partner and portfolio manager on the global rates team at Lord Abbet. 'We stood pat.' BLOOMBERG
Business Times
4 days ago
- Business
- Business Times
Bessent suggests Powell should leave Federal Reserve board in May
[WASHINGTON] US Treasury Secretary Scott Bessent suggested that Federal Reserve chair Jerome Powell should step down from the central bank's board when his term as chair is up in May 2026. 'Traditionally, the Fed chair also steps down as a governor,' Bessent said on Tuesday (Jul 15). 'There's been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it'd be very confusing for the market for a former Fed chair to stay on also.' Powell's term as a Fed governor does not end until January 2028, leaving it possible for him to remain at the central bank, and to participate in monetary policymaking, even after his tenure as the chair comes up next May. Powell has repeatedly declined to answer questions on whether he might stay on as a governor. That reticence has complicated the decision-making for US President Donald Trump and his aides as they look to revamp Fed leadership next year. 'There's a formal process that's already starting' with regard to identifying the nominee to become the next Fed chair, Bessent also said. 'There are a lot of good candidates inside and outside the Federal Reserve.' Asked whether Trump has asked Bessent himself to serve as Fed chair, the Treasury chief said: 'I am part of the decision-making process.' He noted that 'it's President Trump's decision, and it will move at his speed'. Inflation trend Treasuries dropped after Bessent's remarks, with two-year yields hitting a session high of 3.93 per cent. The Bloomberg Dollar Spot Index pared losses and was little changed as at 8.25 am in New York. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Unless Powell makes clear he will vacate his board position, Trump has one scheduled opening to fill next year, with governor Adriana Kugler reaching the end of her term in January. Bessent said last month that one potential timeline would have a Fed chair name emerge in October or November, ahead of that January opening on the board. Trump has made clear that he wants Powell's successor to be someone who favours lowering interest rates. He has repeatedly blasted the Fed chair for standing fast on rates since he took office, after lowering them last year. Central bank policymakers have said they are worried the president's tariff hikes will push up inflation, and prefer to gather more information before opting to resume rate reductions. The latest reading on inflation is due on Tuesday morning, with the June consumer price index. Bessent said that he had not looked at the release in advance of his appearance on Bloomberg, but said: 'I wouldn't put too much emphasis on one number.' He pointed to the recent trend of inflation numbers that show fears about a 'substantial price level rise' have not been substantiated. Building flap 'They have had some big forecasting errors,' with regard to the economy, Bessent said of the Fed. 'And this may be one' as well, he added. Even so, Bessent highlighted that Trump has said 'numerous times he is not going to fire Jay Powell'. Among the likely contenders to succeed Powell as chair are former Fed governor Kevin Warsh and Trump's current National Economic Council director, Kevin Hassett, along with Bessent himself. Investors have also focused on current Fed governor Christopher Waller, who Trump appointed to the board in his first term and who has been open to the idea of lowering rates as soon as this month. Pressure on Powell has risen further this month, with a number of Republicans attacking him over cost overruns in the refurbishment of two historic buildings controlled by the Fed. Some have used the issue to argue it gives the president legal cause for dismissing the Fed chief. Hassett, when asked in an ABC News interview Sunday whether the president has the authority to fire the Fed chair, said: 'That's a thing that's being looked into. But certainly, if there's cause, he does.' Bessent, asked about Hassett's remarks, pointed again to Trump's comments that he was not looking to fire Powell. BLOOMBERG
Time of India
5 days ago
- Business
- Time of India
Scott Bessent says Jerome Powell should leave Fed board in May '26
NEW YORK: US Treasury Secretary Scott Bessent suggested that Federal Reserve Chair Jerome Powell should step down from the central bank's board when his term as chair is up in May 2026. "Traditionally, the Fed chair also steps down as a governor," Bessent said in an interview with Bloomberg Television Tuesday. "There's been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it'd be very confusing for the market for a former Fed chair to stay on also." Powell's term as a Fed governor doesn't end until January 2028, leaving it possible for him to remain at the central bank - and to participate in monetary policymaking - even after his tenure as the chair comes up next May. Powell has repeatedly declined to answer questions on whether he might stay on as a governor. That reticence has complicated the decision-making for President Donald Trump and his aides as they look to revamp Fed leadership next year. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Top 25 Most Beautiful Women In The World Articles Vally Undo "There's a formal process that's already starting" with regard to identifying the nominee to become next Fed chair, Bessent also said. "There are a lot of good candidates inside and outside the Federal Reserve." Asked whether Trump has asked Bessent himself to serve as Fed chair, the Treasury chief said, "I am part of the decision-making process." He noted that "it's President Trump's decision, and it will move at his speed." Live Events Treasuries dropped after Bessent's remarks, with two-year yields hitting a session high of 3.92%. The Bloomberg Dollar Spot Index pared losses and was little changed as of 7:55 a.m. in New York. Unless Powell makes clear he'll vacate his board position, Trump has one scheduled opening to fill next year, with Governor Adriana Kugler reaching the end of her term in January.
