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Is Russia's Financial Fortress Built on Shifting Sands?The transformation of Russia's financial system has been nothing short of seismic. Once deeply integrated with global markets, Moscow's monetary landscape now finds itself in a state of radical reconfiguration, navigating the turbulent waters of international isolation. This shift carries profound implications, not just for Russia, but for the very foundations of the global financial order. At the heart of this evolution lies the Russian Central Bank, whose Governor, Elvira Nabiullina, has found herself at the center of an unprecedented storm. Tasked with controlling inflation amid soaring interest rates, Nabiullina faces a growing chorus of dissent from Russia's business elite - a rare and significant development in a country where corporate voices have long remained muted. This internal conflict underscores the delicate balance the Central Bank must strike, as it seeks to stabilize the ruble and safeguard economic growth in the face of crippling Western sanctions. Russia's financial system has demonstrated remarkable adaptability, forging new international partnerships and developing alternative payment mechanisms. Yet, these adaptations come at a cost, as increased transaction costs, reduced transparency, and limited access to global markets reshape the country's economic landscape. Consumer behavior, too, has evolved, with Russians increasingly turning to cash transactions and yuan-denominated assets, further signaling the shift away from traditional Western financial systems. As Russia navigates this uncharted territory, the implications extend far beyond its borders. The reconfiguration of its financial architecture is shaping new models for sanctions resistance, the emergence of parallel banking networks, and a potential realignment of global currency trading patterns. The lessons learned from Russia's experience may well influence the future of international economic relationships, challenging long-held assumptions about the resilience of the global financial order.
Long
by signalmastermind
BULLISH MOMENTUM! Clear confluence, Read below. NSE:CENTRALBK Date: 03/07/2023 --- Disclaimer: This is just my observation, please do not consider this idea as financial advise. It is important that each individual should due his/her own due diligence before taking a financial decision, more so in the money markets! --- The uptrend seen in the chart is reflected in the RSI. This indicates a good upward momentum. This is by using RSI as a momentum gauge rather than a "overbought and oversold" gauge. The trend has bullish breakthrough in the triangle pattern. After the recent bullish change of character, we can see that today as of me writing this idea, there is a bullish break of structure. This provides a strong chance of bullish momentum in the coming days. The price has tested the 21 and 50 day SMA's and risen past it in the past few days with stride. Price is still in the mid discount zone. Decent entry point. The above points proves a confluence of bullish momentum Take profit would be taken in reference to previous highs as this would serve as a passive resistance zone. TAKE PROFIT 1 = 31.2 TAKE PROFIT 2 = 33.4 TAKE PROFIT 3 = 34.5 Advisable not to go beyond as the area is not strongly tested. Good luck!
NSE:CENTRALBKLong
by surajnagesh
3
BoE Ends The Year With A Hike! (20 December 2021)Surprise rate hike! The Bank of England (BoE) delivered an interest rate hike of 0.15% during their monetary policy announcement last Thursday. Out of the nine committee members, eight voted for a rate hike while one voted for rate to remain unchanged at the previous 0.10%. All nine members voted for no change of corporate bond purchases at £20 billion and UK government bond purchases at £875 billion, totaling £895 billion. With an almost unanimous decision to hike interest rate as opposed to the previous meeting whereby only two members voted for a rate hike, it seems like the committee members are downplaying the impact of the COVID Omicron variant despite the recent spike in Omicron cases in the UK. Reasons behind the hike The first motivating factor for the BoE to hike interest rate is the resilient job market. To the surprise of the central bank, there was no concrete evidence that the ending of the UK furlough scheme in September led to a weakening in the labour market. Instead, the latest data released by the Labour Force Survey indicated that unemployment rate has fallen to 4.2% in the three months to October and that 257,000 jobs were added into the economy in November, thus showing little impact from the exiting of the furlough scheme. Moreover, the central bank’s committee highlighted during the November’s meeting that if future employment data were to be in line with its projection, it will be necessary for rate hikes to take place in order to tone down inflation and maintain it at the BoE’s 2% target. And during the meeting last week, the central bank deemed that the condition has been met, thus an interest rate hike is warranted. Another motivating factor for the rate hike is the recent strong inflation that has caught the attention of the UK Finance minister, leading to the exchange of open letters between him and BoE Governor Bailey. In November, prices in the UK rose to a 10-year high level of 5.1% and is expected to remain around the same level throughout the winter period and peak around 6% in next April. Being the first G7 central bank to carry out an interest rate hike, we can certainly expect the next hike to come as soon as February 2022 since inflation is on the way to triple the central bank’s 2% target.
by GH_Lee
1
The Cautious Kiwi (25 November 2021)As widely expected, we see a further tightening of monetary policy from the Reserve Bank of New Zealand (RBNZ) during the meeting on Wednesday. But the decision did not gain any positive market reaction for the New Zealand dollar as the 0.25% hike in interest rate had already been priced in. It was a 0.50% hike that the market was yearning for. Once the market did not receive the 0.50% hike, a strong sell-off in the New Zealand dollar followed across the board. Catalysts for more rate hikes: maximum employment, high inflation and rising home prices The RBNZ highlighted that employment in New Zealand is now above its maximum sustainable level while unemployment rate has declined to the lowest level in over a decade. At the same time, annual inflation in the country has risen to 4.9%, way above the central bank’s 1-3% target amid the ongoing supply chain bottlenecks and the rising global oil prices. Furthermore, the RBNZ is expecting prices to remain high in the near term before declining back down to within their targeted range. On the matter of home prices, the central bank’s officials concluded that the current level of home prices are unsustainable but noted that continued hikes in interest rate will likely lead to more sustainable home prices. Bond holdings under LSAP no longer significant With the functioning of the bond market improving, the RBNZ has stopped purchasing bonds under the Large Scale Asset Purchase (LSAP) programme in July. Furthermore, the current holdings of the bonds purchased by the central bank are only providing meagre stimulus. Thus, the RBNZ will be providing more details on winding down its bond holdings early next year. All is not lost! Although the modest rate hike was kind of a disappointment, causing the New Zealand dollar to take a hit, it is likely that the impact will be temporary. The RBNZ’s interest rate projection for 2022 indicates that rate hikes are expected in every quarter of the year, with interest rate rising to 2.1% by year-end. This interest rate level has surpassed the pre-pandemic level, thus indicating the central bank’s forecast that the New Zealand economy in 2022 is likely going to outperform the year just before the pandemic struck. The projection material also showed that the RBNZ is expecting annual inflation to peak at 5.7% during the first quarter of 2022 before declining steadily to 3.3% by year-end. However, the expected decline throughout the year is insufficient for inflation to fall within the central bank’s 1-3% target. And so, the officials may still consider a more aggressive rate hike as an option in the future in order to add more downward pressure on prices.
by GH_Lee
The Road To Normalcy Begins (06 November 2021)Fed starts tapering! The long-awaited taper meeting has finally arrived! The Federal Reserve announced during their monetary policy meeting on Thursday that it will begin slowing down its net asset purchases by $15 billion per month which comprises of $10 billion Treasury bonds and $5 billion agency mortgage-backed securities. The first round of tapering will begin later this month and the second round will take place at the beginning of December. Moving forward, the monthly pace of quantitative easing (QE) tapering will be similar to these two months and may be adjusted depending on the economic outlook. Regardless of the pace, the Fed is expecting QE to end by mid-2022. The following illustration shows that under the same tapering pace, QE will end in June 2022. Nov 2021: $70b Treasury Bonds + $35b Agency MBS Dec 2021: $60b Treasury Bonds + $30b Agency MBS Jan 2022: $50b Treasury Bonds + $25b Agency MBS Feb 2022: $40b Treasury Bonds + $20b Agency MBS Mar 2022: $30b Treasury Bonds + $15b Agency MBS Apr 2022: $20b Treasury Bonds + $10b Agency MBS May 2022: $10b Treasury Bonds + $5b Agency MBS Jun 2022: End of QE A small step back on “transitory” With the recent comment made by Fed Chairman Powell that supply bottlenecks will take longer to ease, thus expecting prices to remain high for a longer period of time, the Fed has taken a small step back from its view on inflation being transitory. The previous confidence that the elevated inflation “largely reflecting transitory factors” has now been revised to “largely reflecting factors that are expected to be transitory”. During the press conference, Powell also clarified the definition of “transitory” that the central bank adopts after highlighting that the word has different understanding to different people. For the Fed, “if something is transitory it will not leave behind permanently – or very persistently higher – inflation”. With the ongoing supply chain disruptions, the central bank Chief is expecting inflation to continue its rise into 2022 before easing back down during mid-2022. Maximum employment still quite a distance away Although tapering of the massive $120 billion per month QE programme has begun, Powell warned that the Fed’s decision to do so does not imply a rate hike is underway. The central bank held its interest rate unchanged at the targeted range of 0-0.25% and would like to see the labour market achieve maximum employment before considering a hike. As of the October’s jobs report, the U.S. job market is still some 5 million jobs away from the pre-pandemic level. The Fed is likely going to consider a rate hike only when the jobs lost during the pandemic have been fully recovered. Even so, the central bank may wait a little longer to be certain that jobs growth is indeed consistent before committing.
TVC:DXY
by GH_Lee
3
A Rate Hike Before 2024? (04 November 2021)The Reserve Bank of Australia (RBA) concluded its monetary policy meeting on Tuesday with no change in its weekly A$4 billion bond purchases, aka quantitative easing (QE), while holding interest rate unchanged at 0.10%. What has changed during this meeting is the ending of the central bank’s yield curve control (YCC). Dropping the YCC It all began when the RBA carried out an unscheduled purchase of A$1 billion of April 2024 Australian government bond back in 22 October in an attempt to tame the rising yield, bringing it back down to the central bank’s 0.10% target. Towards the end of October, yield on the April 2024 bond sky-rocketed to 0.75%, the biggest monthly increase since 1994. This time round however, the RBA did not attempt to bring down the yield to its target through any purchase of bonds, leaving the market to speculate that the RBA may be discontinuing its YCC during its November meeting. The decision to end the YCC “reflects the improvement in the economy and the earlier-than-expected progress towards the inflation target” as explained in the rate statement. With the rise of interest rates from other markets, the central bank felt that the efficacy of the YCC has vanished. An earlier rate hike timeline The RBA has repeatedly emphasized that an interest rate hike will be considered only when inflation is sustainably achieved within its 2-3% target. Prior to the November’s meeting, the central bank forecasts that this condition “will not be met before 2024”. However, it has revised this forecast somewhat optimistically in yesterday’s statement, indicating that: “The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2½ per cent at the end of 2023 and for only a gradual increase in wages growth.” With this revision, the RBA is now implying the possibility of inflation coming into the 2-3% targeted range at the end of 2023. This means it is fair game for the central bank to carry forward its rate hike timeline. Overall positive economic projections The RBA’s quarterly economic projections for 2022 and 2023 have underwent positive revisions. Specifically, inflation projection has been revised upwards which is good as it is the main deciding factor of a rate hike from the central bank. The RBA now expects inflation to fall within their 2-3% target for 2022 and 2023. For year 2022, GDP: 5.50% (a little over 4.00%) Unemployment: 4.25% (4.25%) CPI Inflation: 2.25% (1.75%) For year 2023, GDP: 2.50% (2.50%) Unemployment: 4.00% (4.00%) CPI Inflation: 2.50% (2.25%) *Figures shown in parentheses refers to projections from August 2021
by GH_Lee
2
GBPAUD H4 - Long SetupGBPAUD H4 As mentioned in the technical rundown, this was yesterdays trade of the day, I managed to bank 1.5R on this after pushing circa 2.2R profit. Couldn't optimise the close, but caught the biggest and fastest chunk which I was happy with. GBP inflation data out this morning showing positive signs and outperforming analyst expectations. GBP positive, but we haven't really seen much of a move off this. AUD again weakness continuations due to everything ongoing with CV19. Looking for a break above resistance and our 1.89 handle, subsequent retest and long opportunity in line with the previous support/resistance break and retest we saw on the 13th September.
Long
by Trade_Simple_FX
It’s Recalibration, Not Tapering (10 September 2021)The ECB’s decision. The European Central Bank (ECB) held its interest rates unchanged during their monetary policy meeting yesterday. Main Refinancing Operations Rate: 0.00% Marginal Lending Facility Rate: 0.25% Deposit Facility Rate: -0.50% The size of its quantitative easing (QE) programmes remains unchanged as well. Asset Purchase Programme (APP): €20 billion per month Pandemic Emergency Purchase Programme (PEPP): €1,850 billion in total On top of that, the central bank has opted for a reduction of pace in its assets purchase under the PEPP but did not provide more details on the amount. At the moment, €80 billion worth of assets are being purchased on a monthly basis. It’s recalibration, not tapering. Just when the market is trying to figure out from the monetary policy statement if the ECB has just carried out a QE tapering, the central bank’s President Christine Lagarde elucidated that the reduction of the pace is not a tapering, but a recalibration. The ECB’s decision “is to calibrate the pace of our purchases in order to deliver on our goal of favourable financing conditions”. President Lagarde’s comment left the market wondering how significant is such an action carried out by the central bank going to have on QE if it is not considered as tapering. As a result, the euro was moving in an unclear direction. Positive inflation projections. Although the ECB’s action is likely going to spark some discussions over its ambiguity, one thing we know for sure is that the central bank is feeling confident in the recent rise in inflation in the eurozone. As released in the quarterly projection materials, overall inflation forecasts have been revised upwards. Inflation Projections: 2021: revised upwards from previous 1.9% to 2.2% 2022: revised upwards from previous 1.5% to 1.7% 2023: revised upwards from previous 1.4% to 1.5%
by GH_Lee
What to expect from the SNB – Bank of AmericaBank of America discussed its expectations for tomorrow’s SNB meeting in a recent note to clients. Bank of America noted: We expected the SNB to keep its policy on hold, ie, the deposit rate at -75bp paired with discretionary FX interventions. Unlike the ECB, where the reaction function has become more opaque again, we are relatively confident that we have understood the SNB’s: shielding the economy from fast exchange rate appreciation. In this context, changes to policy instruments are unlikely any time soon. FX interventions are more powerful than rate cuts, and with tiering designed to fit the Swiss banking sector, “reversal rate” considerations don’t bite. Inflation should return to positive territory over coming months, but prove insufficiently dynamic to prompt a policy rethink. We expect the SNB to be way down the list of central banks that will normalize policy. As this gap widens, the flow of fund pressures from the Swiss financial account will also rise.
by thunderpips
4
Money Velocity is in Complete FreeFallM2V most recent data is from December 2019. It is likely near zero at the present moment. Some voices are saying that the Fed liquidity and balance sheet expansion is inflationary, but the charts tell a different story. The velocity of M2 is in complete freefall. We have reached the point where interest suppression is no longer an effective tool for monetary policy. It doesn't matter how low rates go or how much the Fed is willing to lend, people don't want to spend or borrow, and insolvent businesses are going to self-liquidate. People are hoarding cash, and rightfully so. You can't print your way out of a global demand shock and supply shock. If you study M2V closely, it tells a story. What you'll see is that the Fed has been in a liquidity trap for the last 20 years. To avoid a big deflation they've pushed rates lower and lower to stimulate growth now and push the problems down the road, but now we're at the end of the road and facing a bigger deflation than we could have ever imagined. There's no more growth to stimulate.
FRED:WM2NS
by Ludwig_Von_Mises
2
GDP? More Like Debt-Financed ConsumptionNotice the time period where the rate of change began to significantly increase. Sad that TV doesn't have the data but if you go and look, inflation from 1700-1900 was extremely stable. Not the "2%" per year inflation of today, was more like gradual deflation over time, with certainty that your money would be worth the same 100 years from now. During the classic gold standard era, from 1870-1910, real growth averaged 8-10% per year, and we had 3% deflation per year. The banking system of today is based off of printing lots of money, getting caught in a liquidity trap, and then being at risk of a major deflation because you thought you were smart enough to inflate an asset bubble with no consequences. That's where we are at right now. Very similar to 1929.
FRED:CPIAUCSL
by Ludwig_Von_Mises
Platinum Breakout & Palladium Blow-off TopPlatinum at current levels presents tremendous value. The precious metals take turns outperforming and underperforming. In the late 90s palladium went into a bubble while gold, silver, and platinum bottomed out. Then throughout the 00's palladium moved sideways while platinum, silver, and gold all outperformed. I believe we are nearing a similar setup where US stocks will enter a blow off top and palladium will follow. Following this blow-off top platinum and silver will begin to drastically outperform. Additionally, the more expensive palladium gets, the more likely industry will find ways to substitute towards platinum. This is especially the case since most of palladium demand comes from China. Be keeping an eye on these metals, along with gold and silver.
TVC:PLATINUM
by Ludwig_Von_Mises