Behind U.S. dollar strength is the Federal Reserve, which is steadfastly holding to its commitment to curb soaring price inflation. This past week it hiked its benchmark interest rate by 75 basis points for the third straight meeting, the fastest clip since the U.S. suffered its last major bout with inflation in the early 1980s.
Other central banks are struggling to keep up with the Fed.
The Riksbank in Sweden surprised market participants Wednesday by hiking its benchmark rate 100 basis points. Swedish central bankers were hoping to lure investors to their bond market and strengthen their currency, the krona. Instead, the opposite occurred, as the dollar surged 3.5% into the end of the week.
Against the krona (SEK=X), the U.S. dollar has strengthened an astounding 25% year-to-date. That is the same level of U.S. dollar appreciation against the Japanese yen (JPY=X) — arguably the canary in the global currency coal mine.
Bank of Japan authorities recently intervened to strengthen the yen for the first time since the Asian currency crisis of 1998. The yen managed to rally a whopping 2.5% before giving back most of it by Friday afternoon.
Looking to emerging markets, the picture is even bleaker.
The Central Bank of the Republic of Turkey — true to its unorthodox approach to monetary policy — cut its benchmark rate by 100 basis points on Wednesday. Unsurprisingly, the Turkish lira (TRY=X) sunk and ended the week on par with the Argentine peso (ARS=X) as the worst-performing currencies of the year. The dollar is up about 40% against both.
United States one hundred dollar bill and Argentine one hundred pesos bill are seen in this picture illustration taken in Buenos Aires, Argentina November 9, 2021. (Photo by Matías Baglietto/NurPhoto via Getty Images)
Overall, after a bunch of central bank moves last week, there was one common denominator whether the banks were hiking rates, cutting them, or standing pat: The dollar ended higher.
And while American tourists abroad may celebrate entire countries going “on sale,” all sorts of investment vehicles — 401ks, institutional portfolios, corporate earnings, crypto holdings — are directly or indirectly feeling pain from of these gut-wrenching currency moves.
It’s likely too late for most currency regimes — developed or otherwise — to avoid serious additional pain. At the same time, there are two of the currencies that have strengthened against the dollar in 2022: the Mexican peso (MXN=X) and the Brazilian real (BRL=X).
Notably, the central banks of these two emerging market countries began raising their rates in the first half of 2021 — long before their peers.
The British pound fell to a record low against the dollar in early Asian trade on Monday as selling continued after the U.K. government on Friday unveiled the country’s biggest tax cuts since the early 1970s. The pound briefly fell below $1.04, hitting a record low, according to data on CQG.
When you put 20% down on the purchase of a home, you don’t have to borrow as much money as someone whose down payment is only 5% or 10%. And as a result, your monthly mortgage payment may be considerably … Continue reading → The post This One Chart Shows Why Putting 20% Down on a Mortgage May Be a Mistake appeared first on SmartAsset Blog.
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The Wall Street Journal
It is the worst year for buying the stock-market dip since the 1930s. Instead of rebounding after a tumble, stocks have continued to fall, denting a strategy that soared in popularity over the past decade.
(Bloomberg) — Week by week, the bond-market crash just keeps getting worse and there’s no clear end in sight.Most Read from BloombergJohn Paulson on Frothy US Housing Market: This Time Is DifferentBank of England Says Paper Banknotes Only Good for One More WeekPound Crashes to All-Time Low With UK Markets ‘Under Siege’The Great Bond Bubble Is ‘Poof, Gone’ in Worst Year Since 1949‘Read Putin More Often and Carefully,’ Lavrov Tells the WorldWith central banks worldwide aggressively ratcheting up
Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet’s Quant Ratings, we zero in on three names. While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names. Nvidia Corp. recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The S&P 500 could retest its June low in the week ahead as equity markets endure a brutal bout of selling spurred by fears the Federal Reserve’s inflation fight may cause a recession.
A thousand days since the World Health Organization (WHO) was told of a “viral pneumonia” in central China, many countries have returned to pre-COVID-19 life. Not so China itself – in cities big or small, routine PCR testing is the new normal. On Dec. 31, 2019, the WHO’s office in China was informed of cases of pneumonia of an unknown cause in the city of Wuhan, in Hubei province.
The Wall Street Journal
Retirement officials predict grim results from investments in private equity and other illiquid assets.
(Bloomberg) — Brent, the international oil benchmark, fell below $85 a barrel for the first time since January amid mounting concerns about a global economic slowdown.Most Read from BloombergJohn Paulson on Frothy US Housing Market: This Time Is DifferentBank of England Says Paper Banknotes Only Good for One More WeekPound Crashes to All-Time Low With UK Markets ‘Under Siege’The Great Bond Bubble Is ‘Poof, Gone’ in Worst Year Since 1949‘Read Putin More Often and Carefully,’ Lavrov Tells the Wor
Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said on Sunday it’s “not going to be easy” to achieve a slowdown in demand without causing a recession, a feat known as a soft landing. Speaking with Margaret Brennan on CBS’s “Face the Nation,” Bostic declined to provide specific odds of achieving a…
The Wall Street Journal
Researchers analyzed securities filings to determine what companies would have paid if the tax had been in place last year and found just six would have paid half of the estimated $32 billion the levy would have generated.
TOKYO (Reuters) -Sterling tumbled nearly 5% to an all-time low on Monday as investors ran for the exits after the new government’s fiscal plan threatened to stretch Britain’s finances to their limits. The currency dived as much as 4.85% to an unprecedented $1.0327, extending a 3.61% dive from Friday, when finance minister Kwasi Kwarteng unleashed historic tax cuts, and the biggest increase in borrowing since 1972 to pay for them. Economists and investors said Prime Minister Liz Truss’s government, in power for less than three weeks, was losing financial credibility in unveiling such a plan just a day after the Bank of England hiked interest rates to contain surging inflation.