The & # 39; Super Dollar & # 39; of the Fed: how much longer?




<div _ngcontent-c16 = "" innerhtml = "

Jerome Powell, president of the US Federal Reserve. A strong dollar has always been a headwind for emerging markets. Photographer: Andrew Harrer / Bloomberg

The reverse interest rate curve is not such a big problem, says Rafael Bostic, CEO of the Atlanta Fed. There will be another two interest rate increases, says & nbsp; Esther George from the Federal Reserve Bank of Kansas City. Anyone hoping for a delay in the strong dollar has just had a bucket of cold water thrown in by the two Fed officials.

A strong dollar is a headwind for every export country of raw materials, because this usually means lower commodity prices. & Nbsp; A strong dollar is always a negative for currencies of emerging markets, because the dollar is the most aggravating muscle there, unlike Europe and Japan. Weaker Indian rupees and Chinese yuans can be good for exports – it makes their goods less expensive. But it is a negative point for other matters, including paying off debts denominated in US dollars.

Equities from emerging markets are 180 basis points away from a bear market. The MSCI Emerging Markets index declined by 18.2% from the highest scores on January 26. The S & amp; P 500 decreases by about 0.3% in the same period.

Bostic called the threat of trade wars that broke the strong dollar scenario and further rate hikes, but did not mention the words emerging markets, China or Turkey, whose currencies have been crushed this year, more than 60% below the dollar. The Argentine peso is even worse, 63% lower this year. The Brazilian real does not do it that well either. It is about 25% lost, although this has more to do with the political risk associated with the coming elections than the Fed. The Russian ruble & nbsp; decreased by 18%. The South African rand fell by 16.2%. The Indian rupee is about 10% cheaper this year than the dollar.

The dollar has won heavily against the currencies of Turkey, Brazil, Russia, India and South Africa.Yahoo! Finance through Bukket.

The Fed exerts a lot of pressure on emerging markets. Turkey is an example here. It is under the most stress, followed by Argentina.

Brad Setser at the Council on Foreign Relations, a well-known expert in the area of ​​balance of payments flows, noted this week& nbsp; whereas Turkey's budget deficit is around 3% of GDP and the tax debt is 30% of GDP. Setser believes that the emphasis on Turkey and the strong dollar should focus on Turkish banks and their large dollar-denominated debt. These banks are the main reason why Turkey's currency crisis could turn into a financing crisis and that would leave Turkey without sufficient foreign exchange reserves to pay its debts.

"The story goes that the Turkish banks show a maturity difference … and will start to lose quickly if domestic interest rates rise too high," says Neil MacKinnon, a senior economist at VTB Capital in London. "From a balance of view perspective, the risk of a run on banks' foreign exchange financing is much more vulnerable than the government's financing needs," he says.

See: Fed & # 39; s Bostic says that economic outlook is good; Looking at yield curve – WSJ

Turkish president Recep Tayyip Erdogan throws flowers to his supporters as he comes to give a speech at his ruling congress for justice and development, in Ankara, Turkey, Saturday, August 18, 2018. (AP Photo / Burhan Ozbilici)

On the other side of the world, Argentine President Mauricio Macri recently traveled to New York to convince Wall Street officials that his government did not go to the standard.& nbsp; Much of the currency weakness has nothing to do with the dollar, although a strong dollar does not help.

Earlier this week, Bloomberg reported President Trump complained Friday to a Southhampton fund-raiser that Fed Reserve chairman Jay Powell does not have a "low-cost Fed chairman." used to be. The comments prompted investors to remind that Trump will continue to weigh the Fed's tarief debate until he pauses a "Powell." Bostic was ready for a break. But yesterday's note on the Atlanta Fed website suggests that he has abandoned the fear that a reverse yield curve will lead to a recession. The economy is simply too strong, says Bostic.

Not so long ago, Bostic could be considered a Fed pigeon, and said he was ready to destroy the "Powell consensus" on further tariff increases in 2019. In May, Bostic said: "it is my job to ensure that (a reverse interest rate curve) does not happen." He confirmed that promise by saying that he "will not vote for something that reverses the curve consciously." He still continues in favor of two further interest rate hikes for 2018.

The outspoken Minnesota Fed Chief, Neel Kashkari, argued last month against further interest rate hikes.

King dollar can be dethroned sooner than later.

"We think the dollar has had a good revival, but we think it has peaked," says Rob Williams, managing director at Sage Advisory, a financial consulting firm valued at $ 13 billion, located in Austin. "The dollar will weaken in the meantime because of political risk," he says. "The long end of the curve does not have a lot of room to go up, we think we'll get to the end of the Fed cycle while other parts of the world are starting to walk and running, I do not think the Fed will surprise for the aggressive side, "says Williams.

Bond results between the emerging state sovereign debt and the 10-year treasury are about 350 basis points higher, putting them close to US high yield spreads. This is no signal for a bear market for fixed-income securities, while currencies in countries like Turkey collapse. Not all of these falls are due to the almighty dollar. Domestic issues also affect these currencies. The Argentine peso has recently weakened to more than 30 dollars. It is back in an IMF program.

Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta. In a recent blog post, he said he was not convinced that a reverse yield curve would lead to a recession. Photographer: Christopher Dilts / Bloomberg

"The strong dollar is a headwind if this continues and we are worried, only less now than a few months ago," Williams says. They were underweight equities in emerging markets and earlier this year with emerging market bonds. But because of volatility, the price is right and Sage is back to stop customer money in emerging markets.

Two to three more interest rises are priced for this year. Maybe the Fed will stand in December. Any kind of surprise on the downside would be a major macro boost for emerging markets.

"The dollar is still rallying a bit on the walks, even if it's priced," says Eric Ervin, CEO of RealityShares, an San Diego-based ETF company that invests in China technology, among other things. "But unless the Fed becomes more aggressive, it will be harder to see the dollar become stronger," he says. This is especially true if the interest rate cycle eventually slows the US economy to an annual growth rate of 2%.

Bostic's comments yesterday did not scare global investors. The MSCI Emerging Markets (EEM) ETF rose 1.75% in the first two hours of trading, more than double the gain in the S & amp; P 500.

">

Jerome Powell, president of the US Federal Reserve. A strong dollar has always been a headwind for emerging markets. Photographer: Andrew Harrer / Bloomberg

The reverse yield curve is not such a big problem, says Rafael Bostic, CEO of the Atlanta Fed. There will be another two interest rate hikes, says Esther George of the Federal Reserve Bank of Kansas City. Anyone hoping for a delay in the strong dollar has just had a bucket of cold water thrown in by the two Fed officials.

A strong dollar is a headwind for every export country of goods, because this usually means lower commodity prices. A strong dollar is always a negative for currencies of emerging markets, because there the dollar bends its muscles the most, unlike Europe and Japan. Weaker Indian rupees and Chinese yuans can be good for exports – it makes their goods less expensive. But it is a negative point for other matters, including paying off debts denominated in US dollars.

Equities from emerging markets are 180 basis points away from a bear market. The MSCI Emerging Markets index declined by 18.2% from the highest figures of January 26. The S & P 500 fell by around 0.3% in the same period.

Bostic called the threat of trade wars that broke the strong dollar scenario and further rate hikes, but did not mention the words emerging markets, China or Turkey, whose currencies have been crushed this year, more than 60% below the dollar. The Argentine peso is even worse, 63% lower this year. The Brazilian real does not do it that well either. It is about 25% lost, although this has more to do with the political risk associated with the coming elections than the Fed. The Russian ruble drops by 18%. The South African rand fell by 16.2%. The Indian rupee is about 10% cheaper this year than the dollar.

The dollar has won heavily against the currencies of Turkey, Brazil, Russia, India and South Africa.Yahoo! Finance through Bukket.

The Fed exerts a lot of pressure on emerging markets. Turkey is an example here. It is under the most stress, followed by Argentina.

Brad Setser of the Council on Foreign Relations, a well-known expert in the area of ​​balance of payments flows, noted this week that Turkey's budget deficit is around 3% of GDP and that public debt is 30% of GDP. Setser believes that the emphasis on Turkey and the strong dollar should focus on Turkish banks and their large dollar-denominated debt. These banks are the main reason why the Turkish currency crisis could turn into a financing crisis and leave Turkey without sufficient foreign exchange reserves to pay its debts.

"The story goes that the banks in Turkey have a maturity mismatch … and will quickly take losses if domestic interest rates rise too high," said Neil MacKinnon, a senior economist at VTB Capital in London. "From the point of view of the balance sheet, the risk of a run on banks' foreign exchange financing is much more vulnerable than the government's financing needs," he says.

See: Fed & # 39; s Bostic says that economic outlook is good; Watching Yield Curve – WSJ

Turkish president Recep Tayyip Erdogan throws flowers to his supporters as he comes to give a speech at his ruling congress for justice and development, in Ankara, Turkey, Saturday, August 18, 2018. (AP Photo / Burhan Ozbilici)

On the other side of the world, Argentine president Mauricio Macri recently traveled to New York to convince Wall Street bondholders that his government would not default. Much of the currency weakness has nothing to do with the dollar, although a strong dollar does not help.

Earlier this week, Bloomberg reported that President Trump had complained Friday to a money collector in Southhampton that Fed Reserve Chairman Jay Powell does not have a "cheap Fed Chairman." used to be. The comments also served as a reminder to investors that Trump continues to weigh the Fed. Rate the debate until he sees a "Powell break." Bostic was ready for a break. But yesterday's note on the Atlanta Fed website suggests that he has abandoned the fear that a reverse yield curve will lead to a recession. The economy is simply too strong, says Bostic.

Not so long ago, Bostic could be considered a Fed pigeon, and said he was ready to destroy the "Powell consensus" on further tariff increases in 2019. In May, Bostic said: "it is my job to ensure that (a reverse interest rate curve) does not happen." He confirmed that promise by saying that he "will not vote for something that reverses the curve consciously." He still continues in favor of two further interest rate hikes for 2018.

The outspoken Minnesota Fed Chief, Neel Kashkari, argued last month against further interest rate hikes.

King dollar can be dethroned sooner than later.

"We think the dollar has had a nice revival, but we think it has peaked," said Rob Williams, managing director at Sage Advisory, a financial consulting firm valued at $ 13 billion, located in Austin. "The dollar will weaken in the meantime because of political risks," he says. "The long end of the curve does not have much room to go up, we think we'll get to the end of the Fed cycle while other parts of the world are starting to walk and going down. for the aggressive side, "says Williams.

Bond results between the emerging state sovereign debt and the 10-year treasury are about 350 basis points higher, putting them close to US high yield spreads. This is no signal for a bear market for fixed-income securities, while currencies in countries like Turkey collapse. Not all of these falls are due to the almighty dollar. Domestic issues also affect these currencies. The Argentine peso has recently weakened to more than 30 dollars. It is back in an IMF program.

Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta. In a recent blog post, he said he was not convinced that a reverse yield curve would lead to a recession. Photographer: Christopher Dilts / Bloomberg

"The strong dollar is a headwind if this continues and we are worried, only less now than a few months ago," says Williams. They were underweight equities in emerging markets and earlier this year with emerging market bonds. But because of volatility, the price is right and Sage is back to stop customer money in emerging markets.

Two to three more interest rises are priced for this year. Maybe the Fed will stand in December. Any kind of surprise on the meager side would be a big macro boost for emerging markets.

"The dollar will still rise a bit on the walks, even if it is priced," said Eric Ervin, CEO of RealityShares, an ETF-based San Diego company that invests in China technology, among other things. "But unless the Fed becomes more aggressive, it will be harder to see the dollar become stronger," he says. This is especially true if the interest rate cycle eventually slows the US economy to an annual growth rate of 2%.

Bostic's comments yesterday did not scare global investors. The MSCI Emerging Markets (EEM) ETF rose 1.75% in the first two hours of trading, more than double the gain in the S & P 500.


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The & # 39; Super Dollar & # 39; of the Fed: how much longer?




<div _ngcontent-c16 = "" innerhtml = "

Jerome Powell, president of the US Federal Reserve. A strong dollar has always been a headwind for emerging markets. Photographer: Andrew Harrer / Bloomberg

The reverse interest rate curve is not such a big problem, says Rafael Bostic, CEO of the Atlanta Fed. There will be another two interest rate increases, says & nbsp; Esther George from the Federal Reserve Bank of Kansas City. Anyone hoping for a delay in the strong dollar has just had a bucket of cold water thrown in by the two Fed officials.

A strong dollar is a headwind for every export country of raw materials, because this usually means lower commodity prices. & Nbsp; A strong dollar is always a negative for currencies of emerging markets, because the dollar is the most aggravating muscle there, unlike Europe and Japan. Weaker Indian rupees and Chinese yuans can be good for exports – it makes their goods less expensive. But it is a negative point for other matters, including paying off debts denominated in US dollars.

Equities from emerging markets are 180 basis points away from a bear market. The MSCI Emerging Markets index declined by 18.2% from the highest scores on January 26. The S & amp; P 500 decreases by about 0.3% in the same period.

Bostic called the threat of trade wars that broke the strong dollar scenario and further rate hikes, but did not mention the words emerging markets, China or Turkey, whose currencies have been crushed this year, more than 60% below the dollar. The Argentine peso is even worse, 63% lower this year. The Brazilian real does not do it that well either. It is about 25% lost, although this has more to do with the political risk associated with the coming elections than the Fed. The Russian ruble & nbsp; decreased by 18%. The South African rand fell by 16.2%. The Indian rupee is about 10% cheaper this year than the dollar.

The dollar has won heavily against the currencies of Turkey, Brazil, Russia, India and South Africa.Yahoo! Finance through Bukket.

The Fed exerts a lot of pressure on emerging markets. Turkey is an example here. It is under the most stress, followed by Argentina.

Brad Setser at the Council on Foreign Relations, a well-known expert in the area of ​​balance of payments flows, noted this week& nbsp; whereas Turkey's budget deficit is around 3% of GDP and the tax debt is 30% of GDP. Setser believes that the emphasis on Turkey and the strong dollar should focus on Turkish banks and their large dollar-denominated debt. These banks are the main reason why Turkey's currency crisis could turn into a financing crisis and that would leave Turkey without sufficient foreign exchange reserves to pay its debts.

"The story goes that the Turkish banks show a maturity difference … and will start to lose quickly if domestic interest rates rise too high," says Neil MacKinnon, a senior economist at VTB Capital in London. "From a balance of view perspective, the risk of a run on banks' foreign exchange financing is much more vulnerable than the government's financing needs," he says.

See: Fed & # 39; s Bostic says that economic outlook is good; Looking at yield curve – WSJ

Turkish president Recep Tayyip Erdogan throws flowers to his supporters as he comes to give a speech at his ruling congress for justice and development, in Ankara, Turkey, Saturday, August 18, 2018. (AP Photo / Burhan Ozbilici)

On the other side of the world, Argentine President Mauricio Macri recently traveled to New York to convince Wall Street officials that his government did not go to the standard.& nbsp; Much of the currency weakness has nothing to do with the dollar, although a strong dollar does not help.

Earlier this week, Bloomberg reported President Trump complained Friday to a Southhampton fund-raiser that Fed Reserve chairman Jay Powell does not have a "low-cost Fed chairman." used to be. The comments prompted investors to remind that Trump will continue to weigh the Fed's tarief debate until he pauses a "Powell." Bostic was ready for a break. But yesterday's note on the Atlanta Fed website suggests that he has abandoned the fear that a reverse yield curve will lead to a recession. The economy is simply too strong, says Bostic.

Not so long ago, Bostic could be considered a Fed pigeon, and said he was ready to destroy the "Powell consensus" on further tariff increases in 2019. In May, Bostic said: "it is my job to ensure that (a reverse interest rate curve) does not happen." He confirmed that promise by saying that he "will not vote for something that reverses the curve consciously." He still continues in favor of two further interest rate hikes for 2018.

The outspoken Minnesota Fed Chief, Neel Kashkari, argued last month against further interest rate hikes.

King dollar can be dethroned sooner than later.

"We think the dollar has had a good revival, but we think it has peaked," says Rob Williams, managing director at Sage Advisory, a financial consulting firm valued at $ 13 billion, located in Austin. "The dollar will weaken in the meantime because of political risk," he says. "The long end of the curve does not have a lot of room to go up, we think we'll get to the end of the Fed cycle while other parts of the world are starting to walk and running, I do not think the Fed will surprise for the aggressive side, "says Williams.

Bond results between the emerging state sovereign debt and the 10-year treasury are about 350 basis points higher, putting them close to US high yield spreads. This is no signal for a bear market for fixed-income securities, while currencies in countries like Turkey collapse. Not all of these falls are due to the almighty dollar. Domestic issues also affect these currencies. The Argentine peso has recently weakened to more than 30 dollars. It is back in an IMF program.

Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta. In a recent blog post, he said he was not convinced that a reverse yield curve would lead to a recession. Photographer: Christopher Dilts / Bloomberg

"The strong dollar is a headwind if this continues and we are worried, only less now than a few months ago," Williams says. They were underweight equities in emerging markets and earlier this year with emerging market bonds. But because of volatility, the price is right and Sage is back to stop customer money in emerging markets.

Two to three more interest rises are priced for this year. Maybe the Fed will stand in December. Any kind of surprise on the downside would be a major macro boost for emerging markets.

"The dollar is still rallying a bit on the walks, even if it's priced," says Eric Ervin, CEO of RealityShares, an San Diego-based ETF company that invests in China technology, among other things. "But unless the Fed becomes more aggressive, it will be harder to see the dollar become stronger," he says. This is especially true if the interest rate cycle eventually slows the US economy to an annual growth rate of 2%.

Bostic's comments yesterday did not scare global investors. The MSCI Emerging Markets (EEM) ETF rose 1.75% in the first two hours of trading, more than double the gain in the S & amp; P 500.

">

Jerome Powell, president of the US Federal Reserve. A strong dollar has always been a headwind for emerging markets. Photographer: Andrew Harrer / Bloomberg

The reverse yield curve is not such a big problem, says Rafael Bostic, CEO of the Atlanta Fed. There will be another two interest rate hikes, says Esther George of the Federal Reserve Bank of Kansas City. Anyone hoping for a delay in the strong dollar has just had a bucket of cold water thrown in by the two Fed officials.

A strong dollar is a headwind for every export country of goods, because this usually means lower commodity prices. A strong dollar is always a negative for currencies of emerging markets, because there the dollar bends its muscles the most, unlike Europe and Japan. Weaker Indian rupees and Chinese yuans can be good for exports – it makes their goods less expensive. But it is a negative point for other matters, including paying off debts denominated in US dollars.

Equities from emerging markets are 180 basis points away from a bear market. The MSCI Emerging Markets index declined by 18.2% from the highest figures of January 26. The S & P 500 fell by around 0.3% in the same period.

Bostic called the threat of trade wars that broke the strong dollar scenario and further rate hikes, but did not mention the words emerging markets, China or Turkey, whose currencies have been crushed this year, more than 60% below the dollar. The Argentine peso is even worse, 63% lower this year. The Brazilian real does not do it that well either. It is about 25% lost, although this has more to do with the political risk associated with the coming elections than the Fed. The Russian ruble drops by 18%. The South African rand fell by 16.2%. The Indian rupee is about 10% cheaper this year than the dollar.

The dollar has won heavily against the currencies of Turkey, Brazil, Russia, India and South Africa.Yahoo! Finance through Bukket.

The Fed exerts a lot of pressure on emerging markets. Turkey is an example here. It is under the most stress, followed by Argentina.

Brad Setser of the Council on Foreign Relations, a well-known expert in the area of ​​balance of payments flows, noted this week that Turkey's budget deficit is around 3% of GDP and that public debt is 30% of GDP. Setser believes that the emphasis on Turkey and the strong dollar should focus on Turkish banks and their large dollar-denominated debt. These banks are the main reason why the Turkish currency crisis could turn into a financing crisis and leave Turkey without sufficient foreign exchange reserves to pay its debts.

"The story goes that the banks in Turkey have a maturity mismatch … and will quickly take losses if domestic interest rates rise too high," said Neil MacKinnon, a senior economist at VTB Capital in London. "From the point of view of the balance sheet, the risk of a run on banks' foreign exchange financing is much more vulnerable than the government's financing needs," he says.

See: Fed & # 39; s Bostic says that economic outlook is good; Watching Yield Curve – WSJ

Turkish president Recep Tayyip Erdogan throws flowers to his supporters as he comes to give a speech at his ruling congress for justice and development, in Ankara, Turkey, Saturday, August 18, 2018. (AP Photo / Burhan Ozbilici)

On the other side of the world, Argentine president Mauricio Macri recently traveled to New York to convince Wall Street bondholders that his government would not default. Much of the currency weakness has nothing to do with the dollar, although a strong dollar does not help.

Earlier this week, Bloomberg reported that President Trump had complained Friday to a money collector in Southhampton that Fed Reserve Chairman Jay Powell does not have a "cheap Fed Chairman." used to be. The comments also served as a reminder to investors that Trump continues to weigh the Fed. Rate the debate until he sees a "Powell break." Bostic was ready for a break. But yesterday's note on the Atlanta Fed website suggests that he has abandoned the fear that a reverse yield curve will lead to a recession. The economy is simply too strong, says Bostic.

Not so long ago, Bostic could be considered a Fed pigeon, and said he was ready to destroy the "Powell consensus" on further tariff increases in 2019. In May, Bostic said: "it is my job to ensure that (a reverse interest rate curve) does not happen." He confirmed that promise by saying that he "will not vote for something that reverses the curve consciously." He still continues in favor of two further interest rate hikes for 2018.

The outspoken Minnesota Fed Chief, Neel Kashkari, argued last month against further interest rate hikes.

King dollar can be dethroned sooner than later.

"We think the dollar has had a nice revival, but we think it has peaked," said Rob Williams, managing director at Sage Advisory, a financial consulting firm valued at $ 13 billion, located in Austin. "The dollar will weaken in the meantime because of political risks," he says. "The long end of the curve does not have much room to go up, we think we'll get to the end of the Fed cycle while other parts of the world are starting to walk and going down. for the aggressive side, "says Williams.

Bond results between the emerging state sovereign debt and the 10-year treasury are about 350 basis points higher, putting them close to US high yield spreads. This is no signal for a bear market for fixed-income securities, while currencies in countries like Turkey collapse. Not all of these falls are due to the almighty dollar. Domestic issues also affect these currencies. The Argentine peso has recently weakened to more than 30 dollars. It is back in an IMF program.

Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta. In a recent blog post, he said he was not convinced that a reverse yield curve would lead to a recession. Photographer: Christopher Dilts / Bloomberg

"The strong dollar is a headwind if this continues and we are worried, only less now than a few months ago," says Williams. They were underweight equities in emerging markets and earlier this year with emerging market bonds. But because of volatility, the price is right and Sage is back to stop customer money in emerging markets.

Two to three more interest rises are priced for this year. Maybe the Fed will stand in December. Any kind of surprise on the meager side would be a big macro boost for emerging markets.

"The dollar will still rise a bit on the walks, even if it is priced," said Eric Ervin, CEO of RealityShares, an ETF-based San Diego company that invests in China technology, among other things. "But unless the Fed becomes more aggressive, it will be harder to see the dollar become stronger," he says. This is especially true if the interest rate cycle eventually slows the US economy to an annual growth rate of 2%.

Bostic's comments yesterday did not scare global investors. The MSCI Emerging Markets (EEM) ETF rose 1.75% in the first two hours of trading, more than double the gain in the S & P 500.


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