Markets love an accommodative Fed. That means, even slightest hint of a pullback in the Fed’s bond buying efforts, is enough to cause a little indigestion for investors.
Sure enough, the April policy meeting minutes are out, and some Fed policymakers say they are “open to discussing” a slowing down the stimulus.
SHOCKING! You mean, the Fed might not be able to keep printing money forever?!
Oh boy. We’ll see how this plays out in today’s markets…
So far, in early trading, investors are calm. The S&P rallied up 0.66% and the Dow trading up 0.30%. While the Nasdaq Composite index traded up 1.27%.
They may be finding some refuge in this: Fed officials also stated that the economy will need to make “substantial” progress towards the Fed’s 2% inflation and full employment goal before Fed officials reconsider their ultra-accomodative, money-printing policy.
“Phew!” says the market.
So, two things:
Inflation is coming…(the Biden team is the only one pretending it’s not on the way) while, full employment…is debatable.
After all, Joe Biden’s has made it awfully easy to stay at home on the couch, and, as such, it’s doubtful Americans will be rushing back to work. $300 a week from Uncle Joe, combined with more money from state? Hey, it sure as heck beats washing dishes.
Interestingly, new data shows that in the REPUBLICAN states that CUT benefits…suddenly, miraculously… PEOPLE WENT BACK TO WORK.
Therefore, proving that when you incentivize people to stay home on the couch, they will.
Jobless Claims Out
The latest weekly jobs numbers show that unemployment claims went down in the latest week. According to the Bureau of Labor Statistics, initial weekly claims were at 444,000, a drop of 34,000 since last week. The actual data was slightly below the expected 450,000.
The unemployment rate continues to recover from the pandemic high of 14.8%. But that’s not the whole story. The number of Americans who are working is still below pre-pandemic levels.
Biden’s stimulus checks are to blame, with many Americans questioning why should they bother going to work.
Interestingly, more than three-quarters of Republican-led states have said they plan to end the extra $300-a-week in federal jobless benefits early, as unemployment claims reached a new pandemic low, likely triggering a decrease in the number of benefits recipients this summer.
Texas, Oklahoma and Indiana joined the list of at least 21 states that are cutting off access to federal benefits early after a much weaker-than-expected April jobs report sparked concerns of labor shortages.
Bitcoin Bounces Back
Bitcoin bounced back above $40,000, reversing some of its Wednesday losses, trading as low as $30,000.
Elon Musk couldn’t help but weigh in on Wednesday, as the crypto markets were recovering.
He tweeted that “Tesla has diamond hands,” which is supposed to mean that Tesla won’t sell its Bitcoin holdings. On Thursday, he tweeted a Doge meme again, sending the price of Dogecoin to $0.42. Dogecoin has since fallen to $0.39.
Gold and Oil Drop
The fear of tapering was also reflected in the prices of key commodities. West Texas Intermediate crude fell by 1.5% to $62 a barrel.
Gold futures fell as well, to 0.8% to $1,867 an ounce. Investors think that Fed’s tapering will hurt demand. But gold may go even higher as inflation starts ramping up.
Dollar Spot Index fell 0.1%. 10-year Treasury yields fell one basis point to 1.66%.