- FOMC:
-Maintains key overnight interest in target range of 0.00 to 0.25%.
-Will continue to buy $80 bln a month in treasuries and $40 bln a month in agency-backed securities until substantial further progress has been made on maximum employment and price stability goals.
-Expects to maintain accommodative policy until inflation runs moderately above 2% for some time, so that inflation averages 2% over time and longer-term inflation expectations remain well-anchored at 2%.
-Economic activity and employment continue to recover but remain well below levels at start of year.
-Extends temporary US dollar liquidity swaps and temporary repurchase agreement facility for foreign and international monetary authorities through Sep 30, 2021.
-Vote in favor of policy was unanimous.
- Fed’s Powell:
-In recent months pace of improvement in economy has moderated.
-Will not lose sight of millions out of work.
-Outlook for economy is uncertain, will depend on virus.
-Says believe increase in balance sheet will ensure policy remains accommodative.
-May take continued support from both fiscal, monetary policy for recovery.
-New guidance on purchases is a powerful message.
-Will give guidance well in advance of any decision to actually taper.
-The case for fiscal policy is very strong, widely understood.
-We had overestimated the effects of previous spikes in covid on the economy, this one is larger though.
-Expectation is second half of 2021 economy will be performing strongly.
-There are small businesses all over the country that are just hanging on.
-It will take some time to get inflation to move up.
-Says have ability to buy more bonds, or buy longer term bonds, and may use it.
-Guidance on purchases today will provide support over time.
- Fed’s staff economic projections:
-Median view of appropriate Fed funds rate at end-2021 0.1% (prev 0.1%).
-Median view of appropriate Fed funds rate at end-2022 0.1% (prev 0.1%).
-Median view of appropriate Fed funds rate at end-2023 0.1% (prev 0.1%).
-Median view of Fed funds rate in longer run is at 2.5% (prev 2.5%).
-One policymaker sees lift-off in Fed funds rate from zero in 2022, five see lift-off in 2023.
-Sees GDP declining less in 2020 than in Sep projections, growing more quickly in 2021 and 2022.
- US retail sales:
-Sales for Nov declined by -1.1% (expected -0.3%).
-Oct’s number is revised to -0.1% from +0.3%.
-Core sales came in at -0.5% (expected +0.2%) versus -0.1% in Oct.
- US Treasury:
-Has determined both Switzerland and Vietnam are currency manipulators.
-Vietnam and Switzerland met all 3 criteria under 2015 Trade Facilitation and Trade Enforcement Act.
-Says it determined both countries intervened in currency markets to prevent effective balance of payment adjustments.
-Vietnam also intervened to gain unfair trade advantage.
-Says it urged China to improve exchange rate management transparency.
-Monitoring list includes: China, Japan, South Korea, Germany, Italy, Singapore, Malaysia, Taiwan, Thailand and India.
-Taiwan, Thailand and India are new additions to monitoring list.
-India and Singapore intervened in currency markets in sustained and asymmetric manner but did not meet other criteria for manipulator designation.
- US treasury official:
-Declines to speculate whether designations could lead to tariffs against Vietnamese, Swiss goods.
-Says "we want to work with Switzerland to deal with the issues" on currency intervention.
-Possible remedies under law include limiting access to US government procurement contracts, development finance.
- US Trade Representative Lighthizer:
-President-elect Biden should insist China keep implementing phase 1 trade deal, use dispute system to resolve conflicts.
-If Biden administration eases China tariffs, will show US 'not serious' about treating Beijing as strategic adversary.
-China phase 1 trade deal implementation "reasonably good" in some parts, not good in others.
- Markets:
-NASDAQ closed at a record high (+0.50%). DJIA is lower by -0.15% while S&P 500 ended up by +0.18%.
-USD Index plummeted and closed at 90.24 (-0.25%), its lowest daily closing since Apr 2018.
-EUR/USD cracked major resistance at 1.2200 (high of 1.2211), plummeted to 1.2123 before snapping back up to close at 1.2197 (+0.38%).
-GBP/USD closed at 1.3511 (+0.30%).
-USD/JPY dropped to a low of 103.25 before recovering to close at 103.48 (-0.17%).
-USD/CNH closed little changed at 6.5127 (-0.06%).
-USD/SGD breached 1.3300 (low of 1.3286) and closed at 1.3291 (-0.23%).
Fed to Maintain Bond Buys Until ‘Substantial’ Economy Gains Seen - Bloomberg https://bloom.bg/2K9zJQQ
Fed raises its economic outlook slightly, sees 4.2% growth next year and 5% unemployment rate - CNBC
https://cnb.cx/3p0efVm
COVID-19 surge, depleted fiscal stimulus thump U.S. retail sales | Reuters https://reut.rs/3gRmY9I
Trump Administration Says Vietnam and Switzerland Manipulated Currency - The New York Times https://nyti.ms/3nEhKRn
Swiss cenbank to press ahead with FX interventions despite U.S. manipulation tag | Reuters https://reut.rs/3r7t5eS
Exclusive-U.S. trade czar Lighthizer's advice for Biden on China: "Hold their feet to the fire" | Reuters https://reut.rs/3mrW9Kr
U.S. Congress closes in on $900 billion COVID-19 aid bill as Friday deadline looms | Reuters https://reut.rs/3893tW1
Bitcoin Surpasses $21,000 for First Time Amid Dizzying Rally- Bloomberg https://bloom.bg/3gUl8Vn
-Maintains key overnight interest in target range of 0.00 to 0.25%.
-Will continue to buy $80 bln a month in treasuries and $40 bln a month in agency-backed securities until substantial further progress has been made on maximum employment and price stability goals.
-Expects to maintain accommodative policy until inflation runs moderately above 2% for some time, so that inflation averages 2% over time and longer-term inflation expectations remain well-anchored at 2%.
-Economic activity and employment continue to recover but remain well below levels at start of year.
-Extends temporary US dollar liquidity swaps and temporary repurchase agreement facility for foreign and international monetary authorities through Sep 30, 2021.
-Vote in favor of policy was unanimous.
- Fed’s Powell:
-In recent months pace of improvement in economy has moderated.
-Will not lose sight of millions out of work.
-Outlook for economy is uncertain, will depend on virus.
-Says believe increase in balance sheet will ensure policy remains accommodative.
-May take continued support from both fiscal, monetary policy for recovery.
-New guidance on purchases is a powerful message.
-Will give guidance well in advance of any decision to actually taper.
-The case for fiscal policy is very strong, widely understood.
-We had overestimated the effects of previous spikes in covid on the economy, this one is larger though.
-Expectation is second half of 2021 economy will be performing strongly.
-There are small businesses all over the country that are just hanging on.
-It will take some time to get inflation to move up.
-Says have ability to buy more bonds, or buy longer term bonds, and may use it.
-Guidance on purchases today will provide support over time.
- Fed’s staff economic projections:
-Median view of appropriate Fed funds rate at end-2021 0.1% (prev 0.1%).
-Median view of appropriate Fed funds rate at end-2022 0.1% (prev 0.1%).
-Median view of appropriate Fed funds rate at end-2023 0.1% (prev 0.1%).
-Median view of Fed funds rate in longer run is at 2.5% (prev 2.5%).
-One policymaker sees lift-off in Fed funds rate from zero in 2022, five see lift-off in 2023.
-Sees GDP declining less in 2020 than in Sep projections, growing more quickly in 2021 and 2022.
- US retail sales:
-Sales for Nov declined by -1.1% (expected -0.3%).
-Oct’s number is revised to -0.1% from +0.3%.
-Core sales came in at -0.5% (expected +0.2%) versus -0.1% in Oct.
- US Treasury:
-Has determined both Switzerland and Vietnam are currency manipulators.
-Vietnam and Switzerland met all 3 criteria under 2015 Trade Facilitation and Trade Enforcement Act.
-Says it determined both countries intervened in currency markets to prevent effective balance of payment adjustments.
-Vietnam also intervened to gain unfair trade advantage.
-Says it urged China to improve exchange rate management transparency.
-Monitoring list includes: China, Japan, South Korea, Germany, Italy, Singapore, Malaysia, Taiwan, Thailand and India.
-Taiwan, Thailand and India are new additions to monitoring list.
-India and Singapore intervened in currency markets in sustained and asymmetric manner but did not meet other criteria for manipulator designation.
- US treasury official:
-Declines to speculate whether designations could lead to tariffs against Vietnamese, Swiss goods.
-Says "we want to work with Switzerland to deal with the issues" on currency intervention.
-Possible remedies under law include limiting access to US government procurement contracts, development finance.
- US Trade Representative Lighthizer:
-President-elect Biden should insist China keep implementing phase 1 trade deal, use dispute system to resolve conflicts.
-If Biden administration eases China tariffs, will show US 'not serious' about treating Beijing as strategic adversary.
-China phase 1 trade deal implementation "reasonably good" in some parts, not good in others.
- Markets:
-NASDAQ closed at a record high (+0.50%). DJIA is lower by -0.15% while S&P 500 ended up by +0.18%.
-USD Index plummeted and closed at 90.24 (-0.25%), its lowest daily closing since Apr 2018.
-EUR/USD cracked major resistance at 1.2200 (high of 1.2211), plummeted to 1.2123 before snapping back up to close at 1.2197 (+0.38%).
-GBP/USD closed at 1.3511 (+0.30%).
-USD/JPY dropped to a low of 103.25 before recovering to close at 103.48 (-0.17%).
-USD/CNH closed little changed at 6.5127 (-0.06%).
-USD/SGD breached 1.3300 (low of 1.3286) and closed at 1.3291 (-0.23%).
Fed to Maintain Bond Buys Until ‘Substantial’ Economy Gains Seen - Bloomberg https://bloom.bg/2K9zJQQ
Fed raises its economic outlook slightly, sees 4.2% growth next year and 5% unemployment rate - CNBC
https://cnb.cx/3p0efVm
COVID-19 surge, depleted fiscal stimulus thump U.S. retail sales | Reuters https://reut.rs/3gRmY9I
Trump Administration Says Vietnam and Switzerland Manipulated Currency - The New York Times https://nyti.ms/3nEhKRn
Swiss cenbank to press ahead with FX interventions despite U.S. manipulation tag | Reuters https://reut.rs/3r7t5eS
Exclusive-U.S. trade czar Lighthizer's advice for Biden on China: "Hold their feet to the fire" | Reuters https://reut.rs/3mrW9Kr
U.S. Congress closes in on $900 billion COVID-19 aid bill as Friday deadline looms | Reuters https://reut.rs/3893tW1
Bitcoin Surpasses $21,000 for First Time Amid Dizzying Rally- Bloomberg https://bloom.bg/3gUl8Vn
