Month: June 2021

Bloomberg/John Authers/6-16-2021

“I’ve spent the last week puzzling over how bond yields have managed to come down so far amid evidence that the recovery is bubbling along nicely. I have no idea what conclusions Jerome Powell and his colleagues came to about this, but they evidently decided that this gave them a great opportunity to start the long and potentially treacherous retreat from the pandemic crisis measures put in place more than a year ago. The instant market response suggests the Fed got what it wanted; a sharp change in expectations that doesn’t – yet – take financial conditions to any dangerous place.”

USAGOLD note: Though the initial reaction has been somewhat muted – even for gold – it is still unclear as to the longer-term effects. Then too, it might be that the first reaction is not the final or defining reaction. Authers offers the thinking from a number of analysts on “Powell’s Surprise” as well as his own – ending with the warning that “the trickiest stage has now arrived.” Though Authers points to the potential for the dollar to rally under these circumstances, he ignores the effect of sustained negative yields which tend to be bearish for the dollar and bullish for gold and silver. And then, too, Wednesday’s events might very well turn out to be not nearly as dramatic as interpreted these past several days.

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