Forex: External Headlines

Global financial media last night this morningThe headlines of common concern mainly include:

　　1. The world's major central banks will hold monetary policy meetings next week, and the Federal Reserve is ready to raise interest rates again

　　2. The Federal Reserve's interest rate decision outlook: Inflation is slowing, but the Federal Reserve is afraid to take risks

      Is the US capital markets 60/40 portfolio making a comeback?

　　4. During the year, U.S. stock investors may take profits and stay away from technology stocks

　　5. Morgan Stanley upgrades its economic growth forecast for the United States, optimistic about a soft landing

　　6. The gold market is bullish, but some Wall Street analysts are more cautious

　　The world's major central banks will hold monetary policy meetings next week as the Federal Reserve prepares for another rate hike

　　The world's leading central banks will meet next week to set monetary policy amid signs that the worst inflation crisis in decades is easing.

　　While markets expect both the Federal Reserve and the European Central Bank to raise rates by 25 basis points, the bigger focus will be on signals from policymakers about whether further rate hikes are possible or whether they plan to extend the hiatus.

　　The Bank of Japan remains an exception, with more than 80% of analysts surveyed expecting BoJ Governor Kazuo Ueda to continue injecting support into the world's third-largest economy, despite inflation remaining above its 2% target.

　　The Federal Reserve's interest rate decision outlook: Inflation is slowing, but the Federal Reserve is afraid to take risks

　　Federal Reserve policymakers are poised to raise interest rates to their highest level in 22 years on Wednesday while retaining a tightening bias, suggesting further action is likely later this year.

　　The FOMC (FOMC) is expected to raise interest rates by a quarter of a percentage point to a range of 5.25% -5.5%, the 11th increase in the past 16 months. The July hike followed a pause in June to slow the pace of rate hikes as they approached a level considered sufficient to bring inflation back to its 2% target over time.

　　Nonetheless, Powell and other policymakers still want to show firmness and reserve the option of another rate hike if necessary to avoid another price spike.

　　Is the US capital markets 60/40 portfolio making a comeback?

　　The "60/40 portfolio" describes the composition of what most people in the investment industry consider a balanced portfolio.

　　Jonathan Lee, senior portfolio manager at Bank of America Private Wealth Management, explains that the target allocation is 60% stocks and 40% bonds. "Stocks can boost economic growth, while bonds stabilize prices and generate income," he says. Is this mix in the portfolio making a comeback? According to Lee, the 60/40 portfolio allocation is making a comeback.

　　"There is no doubt that the diversification generated by holding stocks and bonds has been beneficial for investors for a long time," Li said. "Usually, when returns on stocks fall, returns on bonds rise and vice versa. For many years, both stocks and bonds have produced positive returns." He did note, however, that 2022 was the first time since 1969 that stocks and bonds had seen negative returns.

　　During the year, U.S. stock investors may take profits and stay away from technology stocks

　　According to a recent analysis article, there are indications that the large technology companies that have fueled the rise in U.S. stocks this year may be losing steam.

　　FXTInvesting Given the gains the S & P 500 has already made this year, some investors may opt to take profits and wait for the rest of 2023. Others may simply shift from high-end tech stocks to cyclical stocks, such as financials, which usually signify a bullish signal for the latter. But because tech stocks make up such a large part of the market, these other stocks will have to rise sharply to have a meaningful impact on the index in the second half of the year.

　　Nicholas Colas, co-founder of DataTrek Research, says: "If the big tech stocks fall 10 per cent, everything else has to rise sharply."

　　Morgan Stanley upgrades its forecast for U.S. economic growth, optimistic about a soft landing

　　Morgan Stanley this week reportedly raised its growth forecast, saying President Biden's infrastructure bill had boosted "massive infrastructure".

　　"Economic growth in the first half of the year was much stronger than we expected, providing a more comfortable cushion to our long-held view of a soft landing," Ellen Zentner, chief US economist at Morgan Stanley, said in a report on Thursday, adding that "manufacturing and construction are showing broad strength."

　　On Thursday, Morgan Stanley made a "significant upward revision" to its economic forecasts, forecasting 1.3% GDP growth in the fourth quarter, instead of the 0.6% and 1.9% growth they had originally forecast for the first half, up from 0.5%.

　　The bullish sentiment in the gold market is strong, but some Wall Street analysts are more cautious

　　Surveys show that gold prices rose to a two-month high early this week, creating some solid bullish sentiment in the market; however, several analysts also warned investors against rushing ahead of next week's Federal Reserve rate hike.

　　Among the 19 Wall Street analysts surveyed, eight were bullish and eight were bullish on next week's gold price trend, accounting for 42%, while three were bearish, accounting for 16%.

　　Meanwhile, 221 (60 per cent) of the 369 ordinary investors surveyed online expect gold prices to rise next week, 95 (26 per cent) to soften and 53 (14 per cent) to be neutral. These investors expect gold prices to retest resistance levels around $1,980 by the end of next week.