U.S. President Joe Biden's advisers are considering recommending Jerome Powell for a second term as Federal Reserve chair with Lael Brainard as chief regulator, Bloomberg News reported on Thursday. Biden is yet to weigh in on Fed personnel decisions and a decision by him is not expected until fall. Bloomberg has previously reported that Powell has the backing of Treasury Secretary Janet Yellen to remain as chair. Meantime, in Jackson Hole, "Powell is likely to say that the economy has made good progress and that if it continues down the recent path, tapering might start around year-end and proceed gradually," Cornerstone Macro analysts said. Powell is likely to draw a distinction between tapering and raising policy rates, "which would require more concrete long-term inflation concerns," according to Standard Chartered’s Analyst.
Bridgewater’s Jensen Says Fed Taper Will Be Faster Than Expected
The Federal Reserve will likely taper its asset purchases faster than the markets expect, and interest rates will rise more quickly as
well, according to Greg Jensen of Bridgewater Associates, the world’s largest hedge fund. “The economy is going to pull the Fed,”
Jensen, the firm’s CIO, said on Thursday. “There’s certainly inflation well above their target and we think it will continue to accelerate
if the Fed doesn’t move.” “The biggest arbitrage you can take in the world right now is take what the policy makers are giving you,”
Jensen said. “They’re giving you incredibly low interest rates relative to high nominal GDP growth.” Meantime, Two Fed officials
made hawkish comments this week urging the central bank to start tapering its asset-purchase program. Fed Chair Jerome Powell
has struck a more patient tone and will give his take on the policy outlook Friday in Jackson Hole.
China cbank makes biggest weekly cash injection into banking system since Feb
China's central bank increased its short-term fund injection this week by offering the most cash on a net basis in nearly seven
months to meet higher cash demand towards the month-end. The People's Bank of China (PBOC) said it offered 50 billion yuan
($7.71 billion) through seven-day reverse repos into the banking system on Friday for the third straight session. Previously, the
PBOC usually only injected a minimal 10 billion yuan during the month. The central bank attributed the higher daily injection to
"maintain stable liquidity conditions at the end of the month". For the week, the PBOC has injected a net 120 billion yuan into the
banking system, the largest weekly injection since the start of February.
Dollar Down as Investors Digest Hawkish Fed Comments Ahead of Jackson Hole
The 10-year government bond yield (interpolated) on the previous trading day was 1.60, +0.00 bps. The benchmark government
bond yield (LB31DA, 10.5 years) was 1.61, +3.00 bps. LB31DA could be between 1.59 -1.64. Meantime, the latest closed US 10-
year bond yields was 1.34%, -1.00bps. USDTHB on the previous trading day closed around 32.74 Moving in a range from 32.62-
32.83 this morning. USDTHB could be closed between 32.62-32.72 today. Meantime, The dollar was down on Friday morning in
Asia, with investors digesting hawkish comments from some U.S. Federal Reserve officials ahead of Chairman Jerome Powell’s
speech at the Jackson Hole symposium later in the day.
Sources : Bloomberg, CNBC, Investing, CEIC
