Treasury 10 anni

Dollar, Gold and Treasury, what to expect now?

The last few months have hosted numerous market turbulences, as well as a radical change in the monetary policy expectations of the United States Central Bank.
Jerome Powell danced with the markets during the ups and downs of stock prices, dictated by his own words which, at each press conference, seemed to indicate a different direction in the Federal Reserve's monetary policy.
A bit like the economic data shared by American statistical bodies.
It is no coincidence that central bankers have always declared themselves "data dependent".
In the financial market, currencies, raw materials and government bonds remain those with a trend most closely linked to the monetary policy decisions of the Central Bank.
Accordingly, what expectations can reasonably be had for the dollar, gold and US Treasuries for March? What is happening on the market? An intermarket analysis In mid-2023, the Federal Reserve's motto was "higher for longer".
However, towards the end of the year, Powell eased market fears by announcing the possibility of two cuts.
From the beginning of 2024, up to the present day, this prospect has slowly faded, along with the market's enthusiasm.
In a context of uncertainty, stocks performed well, while gold and bonds performed less well.
Investors have shown a preference for the stock market, probably due to greater convenience versus risk.
The weakening of expectations regarding possible and imminent interest rate cuts has strengthened the dollar, causing a significant inflow of capital into the US market.
Rising Treasury yields have attracted interest from equity investors, and capital inflows into these instruments have increased in recent weeks.
Faced with an increase in opportunity cost, investors have literally abandoned gold to move towards other more profitable options, leading the precious metal to return close to the $2000 threshold, a particularly sensitive technical level.
What makes sense to expect now on the Dollar, Gold and Treasuries? Looking ahead, it may make sense to carefully monitor upcoming economic data for between-the-lines clues about the Federal Reserve's future monetary policy decisions.
For many, the current situation on the market represents an opportunity.
Although central bank officials, particularly in the United States, seem reluctant to reduce interest rates, this possibility should not be ruled out, given that such cuts were announced by Powell towards the end of 2023.
Also, talk about postponing the cuts does not mean that they will not happen, but that they will occur with a certain delay.
Upcoming data to watch closely includes the US GDP growth rate on Wednesday, February 28 and the Core PCE Price Index the following day.

Author: Hermes A.I.

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