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Ringgit opens flat against US dollar, higher versus other majors
Ringgit opens flat against US dollar, higher versus other majors

The Sun

time13 hours ago

  • Business
  • The Sun

Ringgit opens flat against US dollar, higher versus other majors

KUALA LUMPUR: The ringgit opened flat against the US dollar but rose against other major currencies, with investors still weighing the outcome of the Federal Open Market Committee (FOMC) meeting and Washington's reciprocal tariff measures, which take effect today. At 8 am, the local note stood at 4.2650/2850 against the US dollar, almost unchanged from Thursday's close of 4.2650/2730. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid told Bernama that the newly announced tariff will likely support the ringgit and lift investor sentiment. Earlier, the United States announced a reduced tariff of 19 per cent on Malaysian imports, effective Aug 1, 2025. On July 7, US President Donald Trump said Washington would impose a 25 per cent tariff on all Malaysian products entering the country, separate from existing sectoral tariffs. The new rate, effective today, is one percentage point higher than the 24 per cent announced in April. Mohd Afzanizam noted that the US Dollar Index (DXY) continued to rise, gaining 0.15 per cent to reach 99.968 points, supported by the tariff decision and a stronger-than-expected Personal Consumption Expenditures (PCE) price index, which climbed to 2.6 per cent in June. He said the data suggested inflationary risks remained and could prompt the Federal Reserve (Fed) to keep the Fed Funds Rate unchanged at its September meeting. 'Against such a backdrop, the ringgit is expected to stay soft, possibly around RM4.26. Yesterday, the ringgit weakened by 0.61 per cent to close at RM4.2690. 'It appears that, following the FOMC meeting, the US dollar gained traction as the Fed remains committed to its restrictive policy stance to contain inflation risks,' he added. At the opening, the ringgit was higher against other major currencies. It strengthened against the Japanese yen to 2.8277/8411 from 2.8443/8498 on Thursday, rose against the British pound to 5.6328/6592 from 5.6426/6532, and gained against the euro to 4.8711/8939 from 4.8766/8857. The ringgit was mixed against regional peers. It was little changed against the Philippine peso at 7.31/7.35 from 7.31/7.33 and flat against the Indonesian rupiah at 259.1/260.5 from 259.1/259.7. The local note rose against the Thai baht to 13.0169/0876 from 13.0448/0753 and strengthened versus the Singapore dollar to 3.2856/3012 from 3.2889/2953. - Bernama

Ringgit opens flat against US dollar, higher versus other majors
Ringgit opens flat against US dollar, higher versus other majors

The Star

time14 hours ago

  • Business
  • The Star

Ringgit opens flat against US dollar, higher versus other majors

KUALA LUMPUR: The ringgit opened flat against the US dollar but rose against other major currencies, with investors still weighing the outcome of the Federal Open Market Committee (FOMC) meeting and Washington's reciprocal tariff measures, which take effect today. At 8 am, the local note stood at 4.2650/2850 against the US dollar, almost unchanged from Thursday's close of 4.2650/2730. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid told Bernama that the newly announced tariff will likely support the ringgit and lift investor sentiment. Earlier, the United States announced a reduced tariff of 19 per cent on Malaysian imports, effective Aug 1, 2025. On July 7, US President Donald Trump said Washington would impose a 25 per cent tariff on all Malaysian products entering the country, separate from existing sectoral tariffs. The new rate, effective today, is one percentage point higher than the 24 per cent announced in April. Mohd Afzanizam noted that the US Dollar Index (DXY) continued to rise, gaining 0.15 per cent to reach 99.968 points, supported by the tariff decision and a stronger-than-expected Personal Consumption Expenditures (PCE) price index, which climbed to 2.6 per cent in June. He said the data suggested inflationary risks remained and could prompt the Federal Reserve (Fed) to keep the Fed Funds Rate unchanged at its September meeting. "Against such a backdrop, the ringgit is expected to stay soft, possibly around RM4.26. Yesterday, the ringgit weakened by 0.61 per cent to close at RM4.2690. "It appears that, following the FOMC meeting, the US dollar gained traction as the Fed remains committed to its restrictive policy stance to contain inflation risks,' he added. At the opening, the ringgit was higher against other major currencies. It strengthened against the Japanese yen to 2.8277/8411 from 2.8443/8498 on Thursday, rose against the British pound to 5.6328/6592 from 5.6426/6532, and gained against the euro to 4.8711/8939 from 4.8766/8857. The ringgit was mixed against regional peers. It was little changed against the Philippine peso at 7.31/7.35 from 7.31/7.33 and flat against the Indonesian rupiah at 259.1/260.5 from 259.1/259.7. The local note rose against the Thai baht to 13.0169/0876 from 13.0448/0753 and strengthened versus the Singapore dollar to 3.2856/3012 from 3.2889/2953. - Bernama

Will U.S. Government Bonds Rally?
Will U.S. Government Bonds Rally?

Yahoo

time25-07-2025

  • Business
  • Yahoo

Will U.S. Government Bonds Rally?

While the U.S. Federal Reserve's primary monetary policy tool is the short-term Fed Funds Rate, market forces determine interest rates further along the yield curve. In a June 5, 2025, Barchart article on Moody's downgrade of the U.S. sovereign credit rating, I concluded: Moody's reduced the U.S. sovereign credit rating because of debt concerns. Meanwhile, Republican opposition to the 'big beautiful bill' in Congress and the Senate comes from members who believe increasing the debt is a tragic mistake. JP Morgan Chase's Jamie Dimon told markets to expect a crack in the U.S. bond market, as he expects higher rates and lower bonds on the horizon. The President's Big Beautiful Bill passed and was signed into law, and the bond market has not 'cracked' as of July 2025. The September 30-year Treasury Bond futures were trading at 112-02 on June 2, 2025, and were little changed in late July. The sideways trading range remains intact The U.S. 30-year Treasury Bond futures have been in a bearish trend since the Q1 2020 high. The twenty-year chart highlights the decline that took the long bond futures to a 107-04 low in Q4 2023. Since then, the bonds have been in a 110-01 to 127-22 trading range. At the 112 level in July 2025, the bonds were trading not far above the low end of the trading range. Meanwhile, long-term technical support below the Q4 2023 low of 107-04 is at the Q2 2007 low of 104-16. Technical resistance is at the 127-22 level. While the trend remains bearish, the nearly two-year trading range has remained intact. A change at the U.S. central bank is on the horizon The short-term Fed Funds Rate remains at a midpoint of 4.375% unchanged in 2025. After cutting the Fed Funds Rate by 100 basis points in 2024, the central bank has left rates unchanged, citing concerns that tariffs will exacerbate inflationary pressures. Meanwhile, President Trump has said that U.S. short-term rates should be at least 2% lower than the current level, blaming the central bank and Fed Chairman Jerome Powell for wasting billions on servicing the U.S.'s over $37 trillion debt. While the President told markets that he is not likely to fire Chairman Powell, the writing is on the wall, and the President will likely replace the current Chairman when his term expires in May 2026. The successor will undoubtedly favor lower short-term rates. The Fed has forecast two rate cuts, totaling 50 basis points, by the end of 2025. However, the latest 50% tariff on copper and the latest June CPI data that came in higher than the previous month could prolong the pause in rate cuts from the July to the September FOMC meeting. However, the trade deal with Japan and the rising potential for an agreement with the European Union before the August 2 deadline could force the Fed's hand to cut the short-term Fed Funds Rate, as 4.375% is too high in an environment where stagflationary pressures are diminishing. No guarantee that lower short-term rates will lead to lower long-term rates The Fed controls monetary policy primarily through its short-term Fed Funds Rate. The central bank is an independent body, and its mandate is full employment and stable prices. The Fed's benchmark for stable prices is a 2% inflation target. While the economic condition has declined toward the 2% target over the past years, it has not reached the level. Meanwhile, the latest CPI data showed a 0.3% increase for June, pushing the 12-month inflation rate to 2.7%. Core CPI, excluding food and energy, rose 0.2% for the month, with the annual core rate at 2.9%. While both the CPI and core CPI rose, the increases were no surprise, as they were in line with expectations. Rates further along the yield curve are influenced by market sentiment. The Fed cannot directly control long-term interest rates, but it does have some tools that can influence longer maturities. Quantitative tightening or easing involves selling or buying long-term government or mortgage-backed securities to influence longer-term rates. However, the government bond market is massive, and its path of least resistance, which determines long-term U.S. rates, is created by the buying or selling of debt securities. Therefore, there are no guarantees that a lower short-term Fed Funds Rate will lead to lower long-term U.S. interest rates. The debt will rise- Does that matter? The U.S. debt currently stands at over $37 trillion, and the administration's economic package allows for the debt ceiling to rise by an additional $5 trillion. Moody's, the credit rating agency, lowered its rating on U.S. sovereign debt, citing the debt level. Many economists believe that the debt is a ticking financial time bomb, leading to slowing economic growth, higher interest rates, and a potential financial crisis. Other economists argue that the U.S. debt does not pose a threat to the U.S. economy, particularly if the debt is denominated in U.S. dollars. The U.S. can issue debt in its own currency, making default less likely and allowing the government to manage its debt obligations with flexibility. Moreover, the government can control spending and institute policies to grow its way out of debt through increased productivity and innovation, resulting in rising tax revenues. The administration argues that tariffs will offset some of the rising debt levels. The bottom line is that if investors have confidence in the U.S. government's ability to repay its debt, the economy will retain stability. There are compelling arguments on both sides about whether the debt level matters. Clearly, lower debt levels are preferable. The TLT ETF tracks long-term U.S. interest rates The most liquid ETF product tracking long-term U.S. interest rates is the iShares 20+ Year Treasury Bond ETF (TLT). At around $86 per share, TLT had over $47.6 billion in assets under management. TLT trades an average of more than 37 million shares daily and charges a 0.15% management fee. The quarterly chart shows the TLT's performance over the past twenty years, falling from the 2020 high to the Q4 2023 low and trading in a $83.30 to $101.64 range since early 2024. TLT is a highly liquid ETF that does an excellent job tracking price action in the U.S. long bond futures. The range since the beginning of 2024 highlights the technical support and resistance levels. If rising U.S. debt levels lead to selling in the bond market, TLT is likely to head lower. However, if the debt doesn't matter and the U.S. can reduce spending and grow its way out of the debt through economic initiatives, the TLT will likely rally. For now, long-term interest rates and the TLT remain in a trading range, closer to the lows than the highs since early 2024, and are waiting for the next economic shoe to drop. Expect short-term rates to decline, but the path of long-term rates depends on the success of current economic initiatives. On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Market legend makes surprising stock market bet
Market legend makes surprising stock market bet

Yahoo

time18-07-2025

  • Business
  • Yahoo

Market legend makes surprising stock market bet

Market legend makes surprising stock market bet originally appeared on TheStreet. The stock market has shrugged off the April tariff-driven meltdown, with the S&P 500 delivering a scorching 25% rally since April 9, when President Donald Trump paused reciprocal tariffs proposed on April 2, so-called 'Liberation Day.' The market's gain has happened despite worrisome economic data suggesting slowing activity that leaves the door open to stagflation or recession. The jobs market is shaky and inflation progress appears stalled. GDP estimates are falling, and the Federal Reserve appears boxed in regarding much-wanted interest rate cuts. The "buy-the-dip" mentality and the FOMO it spawned have fueled a market that has defied gravity so far. However, many wonder if stocks may have gotten ahead of themselves, suggesting it may be time to "sell the rip." The market action and potential risks facing the economy have led many on Wall Street to update their stock market predictions, including Bill Gross, who has been tracking markets professionally since 1971. Gross co-founded Pacific Investment Management Co., or PIMCO, a top asset manager with $2 trillion under management. As the portfolio manager for PIMCO's $270 billion Total Return Fund, his market calls earned him the nickname 'Bond King' before he joined Janus Henderson Investors, where he worked from 2014 to 2019. 💵💰💰💵 Gross's 50-year career means he's witnessed many market tops and bottoms. This week, he made a bold stock market prediction that included an update on how he's positioning his own money after the S&P 500's record-setting run higher. Has the Fed fallen behind the curve? The Federal Reserve has a tough job. Its dual mandate is to set the Fed Funds Rate at levels that result in low unemployment and inflation — two often contradictory goals. When the Fed cuts interest rates, it sparks economic activity that boosts employment and causes inflation. When it raises rates — like in 2022 and 2023, when it increased rates by 5% to battle runaway inflation — it caps economic growth, slowing inflation but raising a result, the Fed's monetary policy walks a tightrope. The stakes are high enough that it often hesitates when shifting from hikes to cuts or cuts to hikes for fear of causing more problems than it fixes. That's been the case this year. Amid signs of economic slowing, Fed Chairman Jerome Powell has left the Fed Funds Rate unchanged at 4.25% to 4.5%, a significant disappointment following 1% rate cuts into the end of 2024. Powell's is reluctant to reduce rates despite significant jawboning from President Trump's administration, which wants lower rates to help offset risks that tariffs weigh down gross domestic product, or GDP. In 2024, GDP grew at a healthy 2.8%. However, the World Bank estimates the U.S. economy will only grow 1.4% this year. The slower growth may already be causing problems for the job market. According to Challenger, Gray, & Christmas, layoffs totaled over 696,000 through May this year, up 80% year over year. Meanwhile, the unemployment rate, while historically low, has risen to 4.1% from a low of 3.4% in 2023. The Fed's hesitancy in the wake of slower GDP and job losses is based on concern over inflation. The Central Bank's hawkish policy on rates wrestled CPI inflation below 3% from 8% in 2022; however, progress has slowed recently. In June, headline CPI inflation increased 2.7% from one year ago, up from 2.6% in May. Many economists believe that corporations passing higher tariffs to consumers will cause inflation to continue climbing in the second half of the year. More Experts Analyst makes bold call on stocks, bonds, and gold TheStreet Stocks & Markets Podcast #8: Common Sense Investing With David Miller Veteran fund manager sends dire message on stocks If so, adding rate cuts to the mix could further fan inflationary fires, resulting in another inflationary spike. Still, the Fed's unwillingness to lower interest rates may mean that it falls behind the curve, which could make avoiding a recession more difficult. The University of Michigan's Consumer Sentiment Survey fell 11% year-over-year to 60.7 in June due to worry over inflation, potentially signaling that some households may reduce spending. Meanwhile, the ISM Manufacturing PMI, a measure of factory activity, was 49, and its June Services PMI was 50.8, 1.6 percentage points below the 52.4 average over the past 12 months. Those readings aren't bad, but don't indicate robust activity. Bill Gross shifts gears on the stock market Bill Gross's long Wall Street career has given him front-row seats to the rise and fall of the Nifty 50, skyrocketing inflation in the 1970s, the S&L crisis in the late '80s and early '90s, the Internet boom and bust, the Great Recession, Covid, and the 2002 bear market. He previously said on X on June 24 that he expected "a 'little bull market' for stocks."His mood has turned more bearish amid growing White House calls for Fed Chair Jerome Powell's resignation. "Investors wake up!" implored Gross on X. "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 a 3% center." Gross went on to explain that he thinks that "some aspects of this are stock market positive," but also said that "others are not." Overall, he thinks "uncertainty on Fed policy, tariffs, and the influence of AI will be significant." Historically, uncertainty hasn't been a great recipe for stock market gains. Gross concluded bluntly, "I for one am moving defensively — more cash, buying value with 4-5% dividend yields." What stocks does Gross favor in his defensive portfolio? He mentions master limited partnerships for pipeline companies, which offer above-average yields. "I continue to like MLP pipelines with their high tax-deferred dividends (7-9%) and future infrastructure prospects due to AI, AI information centers, electricity demand, and the natural gas needed to generate it. () , () are my favorites," wrote Gross. He's also looking at high-yielding consumer stocks, including Kraft Heinz () . Consumer goods stocks typically perform best during a recession. "Becoming intrigued with food stocks. They're going nowhere pricewise but a 6.2% yield on KHC (Kraft Heinz) is attractive for income. It's breaking the company into two parts which may push price a little higher," said legend makes surprising stock market bet first appeared on TheStreet on Jul 18, 2025 This story was originally reported by TheStreet on Jul 18, 2025, where it first appeared.

Goldman Sachs revamps Fed interest rate cut forecast for 2025
Goldman Sachs revamps Fed interest rate cut forecast for 2025

Miami Herald

time05-07-2025

  • Business
  • Miami Herald

Goldman Sachs revamps Fed interest rate cut forecast for 2025

The Fed is under fire for its monetary policy decisions this year. Last year, it decided the risks of rising unemployment were greater than the risk of sticky inflation. As a result, it cut interest rates last September, November, and December, shaving a total of 1% off the Fed Funds Rate used by banks to set lending rates on everything from credit cards to mortgage rates. The pivot from rate hikes in 2022 and 2023 to rate cuts was widely forecast, and a big reason behind the S&P 500's epic 24% return in 2024. Most thought the Fed would continue to put its foot on the economic gas pedal, reducing rates in 2025, too. However, that hasn't happened. The Fed has left interest rates unchanged despite rising layoffs and declining GDP growth. Don't miss the move: Subscribe to TheStreet's free daily newsletter What caused the Fed to pause? Tariffs. After the Fed's most recent meeting, where they left rates again unchanged within the 4.25% to 4.5% range, Fed Chairman Powell conceded that uncertainty surrounding the inflationary impact of tariffs had forced it to the sidelines. That decision has drawn sharp criticism from President Trump's administration, who view interest rate cuts as key to propping up the economy and offsetting the drag tariffs may cause. Nevertheless, Wall Street expects that the Fed won't remain sidelined forever. Goldman Sachs, one of the most influential firms, has updated its interest rate cut outlook for 2025 based on the most recent economic Fed has two jobs: low inflation and unemployment. Unfortunately, accomplishing its mission isn't easy. Increasing interest rates slows inflation but raises unemployment, while cutting rates increases inflation but lowers unemployment. Related: Veteran fund manager drops bold July Fed interest rate prediction after jobs shocker The contrary nature of its dual mandate is on full display this year. The Fed's rate hikes in 2022 and 2023 drove inflation from 8% to below 3%. However, they also caused the unemployment rate to increase to 4.1% from 3.4% in 2023. The Fed's cuts last year were designed to strike a balance, propping up the jobs market without fanning inflationary fires. Unfortunately, President Trump's tariffs, including 25% on Canada, Mexico, and autos, plus 30% on China and a baseline 10% tariff on all imports, make it much harder for the Fed to walk the inflationary tightrope. If the Fed cuts more, inflation may reassert itself. If it stays put, the economy may sour and slide into stagflation or recession. There's already evidence that the economy is weakening. GDP shrank 0.5% in Q1, and the Fed and World Bank expect GDP to be just 1.4% in 2025, down from 2.8% in 2024. The particularly tough backdrop is that some Wall Street firms, including Bank of America and Morgan Stanley, expect the Fed to remain sidelined for the rest of this year. Goldman Sachs doesn't share that opinion. It expects that the Fed will turn friendly again, embracing dovish cuts this fall. Related: Bank of America unveils surprising Fed interest rate forecast for 2026 Their economists previously expected the Fed to reduce its Fed Funds Rate twice before year's end. However, they changed that outlook recently, and now expect the Fed to cut rates three times. They altered their outlook based on lower-than-expected impacts from tariffs on inflation so far, plus ongoing question marks in the jobs market. For perspective, while the unemployment rate fell to 4.1% in June from 4.2% in May, a better-than-expected outcome, companies have laid off over 696,000 workers this year through May, up 80% year over year, according to Challenger, Gray & Christmas. Goldman Sachs expects the first quarter-point rate cut to occur in September. The Fed is expected to cut again by the same amount at the FOMC's October and December meetings. In 2026, it predicts an additional two rate cuts, which would leave the Fed Funds Rate at 3% to 3.25%. Related: Fannie Mae Chair Pulte drops grim message to Fed Chair Powell The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.

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