The $2.4 Trillion Hidden “Fed Tax”
Written by Peter Diekmeyer, Sprott Money News
Jerome Powell’s support for the Federal Reserve’s low interest rate regime has long benefited investors, who reacted favorably to news that he would be Donald Trump’s nominee as its new chair.
Bunds are bid relative to Treasuries this morning following the Merkel headlines, pushing the US-German yield spread to the critical 200bps level...
Amid heavy volume selling in Treasury futures...
Which has pushed the US-German spread up to 200bps once again...
A key threshold since the election...
Is that cheap enough to buy, or a breakout?
It's a relatively quiet, holiday-shortened (in the US) week, in which volumes are expected to grind lower as we head into the Thanksgiving holiday.
US index futures are unchanged, having recovered virtually all overnight session losses alongside the EURUSD following Merkel's failure to form a government, while European shares rise despite Angela Merkel's failure to form a new government. In the span of just hours, the goalseeked "hot take" consensus was that Germany’s collapsed coalition talks aren’t expected be a deal breaker for European equities due to the "strength of the German economy."
Submitted by Shant Movsesian and Rajan Dhall MSTA of fxdailyterminal.com