Precious metals conceded value to close out what has mostly been a lackluster week. There were not all that many economic happenings, but some valuable information was dealt that may have an impact on the market in the future. In truth, we have seen spot values take quite the tumble over the last few weeks and that is mostly due to stocks in the US and around the world being generally stronger than they have been in recent history. US stock indexes in particular were seen on the up and up for a large majority of this week, only taking hits due to some mixed earnings reports which were released earlier in the week.
Monetary Policy Talk Abounds
If you flash back 3 or 4 months ago, the only real talk concerning monetary policy had to do solely with the United States and the Fed’s seemingly inevitable move to push interest rates higher. At that point in time you would have been hard-pressed to find even one person out there who would have bet against the Fed raising rates multiple times before year’s end. That all changed in the blink of an eye as poorer US economic data and the subsequent BRExit decision all but ended rate hike expectations.
Now that we have successfully weathered the BRExit storm—or at least the first storm—monetary policy is once again on the front-burner. This time it isn’t just the US that is looking to change policy, but rather many major economies from around the world.
Starting off with the United States, we have seen quite a drastic chain of events happen over the past month or so. Immediately after BRExit we heard murmurings not about rate hikes, but instead about the possibility of the Fed reducing rates. That conversation quickly came and went, and now, on the back of upbeat employment data and other economic reports from the US, we are seeing investors once again convinced that interest rate hikes might come after all. At this point we are not expecting rates to be hiked at July’s meeting, but there are plenty of experts and members of the Fed who anticipate at least one further rate hike.
Moving right along, we are also paying attention to possible monetary policy changes in Japan. With their economy still underperforming according to most metrics, there is a strong expectation that their stimulus program will be expanded. Just this week, however, the BoJ made it clear that they are not simply looking for any excuse to expand stimulus. Instead, they commented that there will be a lot of consideration before any major policy changes occur.
Finally, to round out the week, the European Central Bank held their monthly policy meeting; the first since the BRExit decision. Despite some people thinking that the ECB would make some sort of change to monetary policy, such did not prove to be the case. In all, the ECB meeting came and went without having much of an impact on the market at all.
Moving forward, we have the US FOMC meeting to look forward to. Though no changes to interest rates are expected, investors are interested to hear what the FOMC has to say about how BRExit has, or might in the future, affect policy here at home. In addition, everyone will be wanting to hear any and all clues relating to the possibility for further rate hikes. With US stock markets, the Dollar, and US economic data consistently beating expectations in recent weeks, there are many people who cannot seem to be able to find a reason why interest rates are remaining put. For us being in the middle of the summer, there has been an awful lot to talk about. The only thing is, much of that talk has not had much of an impact on the global marketplace.