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Incoming Senate Republican leader John Thune anticipates discussions with Treasury secretary nominee Scott Bessent regarding tariffs and the Federal Reserve during their meeting. Thune expressed interest in hearing Bessent's perspectives on these key topics ahead of the nomination hearings.
UBS Global Wealth Management's Mark Haefele noted that President-elect Trump's proposed tariffs on Mexico, Canada, and China have led to currency declines and market volatility. While the tariffs aim to leverage negotiations on migration and drug trafficking, Haefele maintains a positive outlook on US equities, citing strong growth prospects despite potential trade risks. He recommends a defensive stance on China stocks and suggests diversifying portfolios with gold and alternative assets.
AUD/USD closed last week at 0.6514, marking a second consecutive week of gains, driven by hawkish comments from RBA Governor Michele Bullock and a weaker US dollar following Scott Bessent's appointment as Treasury Secretary. Despite a projected 0.5% rise in Q3 GDP, the Australian economy faces slow growth, with the annual rate expected to remain at 1%. The currency pair is currently oversold, and a sustained move above 0.6550 is needed to shift the outlook towards neutrality.
IG
UBS Global Wealth Management's Mark Haefele discusses the potential impact of President-elect Trump's proposed tariffs on Mexico, Canada, and China, which could lead to market volatility. The Canadian dollar and Mexican peso have weakened, while the Chinese renminbi fell to 7.26 against the US dollar. Haefele notes that the tariffs, aimed at addressing illegal migration and drug trafficking, may initiate negotiations despite the USMCA not being up for review until 2026. He maintains a positive outlook on US equities, particularly in technology, utilities, and financial sectors, while advising caution in China stocks and suggesting portfolio diversification.
UBS analysts predict gold prices could reach $2,900 per ounce by the end of 2025, citing strong support despite recent profit-taking and a new Treasury Secretary viewed as a fiscal hawk. They anticipate continued volatility influenced by inflation, interest rates, and geopolitical tensions, while noting that investor allocations in precious metals remain low, indicating potential for growth in both gold and mining stocks.
Inflation expectations are likely to decline, potentially impacting gold prices, while US equities face a challenging year ahead, particularly in 2025. The Russell 2000 small-cap index shows promise, and falling interest rates in Europe may strengthen the dollar, benefiting European stocks. However, Trump's tariffs pose significant risks for non-US markets, and the new Treasury Secretary's focus on reducing the deficit and increasing oil production could further dampen inflation expectations.
As Wall Street employees anticipate their Christmas bonuses, they reflect on their value, particularly in light of potential shifts in leadership. The prospect of high-profile figures like Jamie Dimon and Marc Rowan leaving for public office raises concerns among shareholders about the future of major financial institutions.
China's yuan is projected to weaken to record lows as U.S. tariff threats escalate, with major investment banks forecasting an average of 7.51 per dollar by the end of 2025. The yuan's depreciation poses challenges for Chinese authorities, who aim to stabilize the currency while reviving the economy. The People's Bank of China is expected to implement measures to prevent excessive declines, balancing currency control with economic growth.
U.S. Treasury yields fell as investors awaited key inflation data, with the 10-year yield down to 4.2673% and the 2-year yield at 4.2210%. The October personal spending and income report, including the Fed's preferred inflation gauge, is set for release at 10 a.m. ET, with economists predicting a 2.8% year-over-year increase for the core reading. Meanwhile, traders see a 66% chance of a quarter-point rate cut in December, as Fed officials express confidence in easing inflation and gradual policy adjustments.
U.S. markets are responding positively to President-elect Donald Trump's policies, with the S&P 500 and Dow Jones hitting record highs despite his tariff threats. The Federal Reserve plans to gradually lower interest rates if inflation stabilizes at 2% and employment remains strong. Meanwhile, Softbank invests $1.5 billion in OpenAI, reflecting ongoing interest in tech advancements.

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