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Federal Reserve policy adjustment and inflation challenges, short-term trend analysis of spot gold, silver, crude oil and foreign exchange on May 29
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: Federal Reserve policy adjustment and inflation challenges, short-term trend analysis of spot gold, silver, crude oil and foreign exchange on May 29". Hope it will be helpful to you! The original content is as follows:
Global Market Review
1. European and American market conditions
The three major futures indexes rose, Dow futures rose 1.10%, S&P 500 futures rose 1.49%, and Nasdaq futures rose 1.89%. The FTSE 100 index in the UK rose 0.45%, the French CAC40 index rose 1.01%, the European Stoke 50 index rose 1.02%, the Spanish IBEX35 index rose 0.48%, the Italian FTSE MIB index rose 0.87%, and the German DAX30 index rose 0.81%.
2. Interpretation of market news
Federal policy adjustments and inflation challenges
⑴Federal Chairman Powell is trying to adapt the Fed's policy tools to the current economic situation rather than the past economic environment. After years of low growth, the Fed's slow and hasty response to post-epidemic inflation has led to out-of-control public expectations of inflation, and price increases are expected to exceed 7% next year. ⑵ The upcoming Fed operational review provides Powell with the opportunity to formally turn his attention to suppressing inflation, even if it sacrifices another part of his dual mission: maintaining full employment. ⑶ Despite political pressure, the Federal Reserve can regain control of the inflation narrative only by raising interest rates. ⑷Powell is in a dilemma: on the one hand, President Trump demands lower interest rates while implementing trade tariffs that increase costs; on the other hand, lawmakers are formulating a tax cut bill for budget deficits. ⑸ In this case, consumers' expectations of inflation are still reasonable, although fluctuating with Trump's contradictory remarks. ⑹The challenges the Federal Reserve faced in the 2010s were very different from those currently. The Federal Reserve reviews its politics every few yearsThe 2020 review result is a "average inflation target system", that is, the Federal Reserve allows inflation to exceed 2% over a period of time to reach its target average. ⑺However, this policy was almost outdated when it was introduced, because the current economic environment is very different from the period after the financial crisis. ⑻ According to data from Yale University's Budget Laboratory, the current weighted average tariff rate in the United States is 17.8%, the highest since 1934. The planned tax cuts over the next decade could result in about $4 trillion in debt, which could squeeze out private investment and increase financing costs. These signals have a strong impact on the public, and the Fed’s mission is to make louder sounds.
American customers call to urge Yiwu to ship the goods
Early in the morning, this toy manufacturer in Shangxi Town, Yiwu City, Zhejiang Province began to get busy. Boxes of packed Halloween toys are being loaded into the cabinet. This batch of orders will arrive in the United States in 20 days. According to the xmserving.company's person in charge, the xmserving.company's main business is to unzip toys, of which trade with the United States accounts for about 60% of the total export business. After the news of easing tariffs between China and the United States came, American customers quickly called and the other party excitedly urged shipments on the other side of the ocean. The customer was worried about changes in the tariff policy and asked to seize the 90-day tariff window period, and also took the initiative to bear all the shipping and tariff costs of existing orders.
Russia said Ukraine has not responded to the second round of negotiations in Istanbul on June 2
On May 29 local time, Russian President’s press secretary Peskov said at a briefing that Ukraine’s approach to demanding Russia “submit a memorandum immediately” was not constructive, and refused to disclose what conditions for ceasefire Russia would propose in the draft memorandum. In addition, Peskov said that Russia proposed a meeting in Istanbul on June 2, and Russia waited for Ukraine's response to the proposal to continue negotiations on June 2, rather than assuming that the negotiations might break down. Peskov also pointed out that the most important thing at present is to continue the direct negotiation process between Russia and Ukraine. When mentioning the call between Russian and US dollar heads, Peskov said that all xmserving.communication channels have been established and dialogue between Putin and Trump can be arranged at any time as needed. Trump and Putin had a phone call on May 19 to discuss issues such as the Ukrainian crisis, and the call lasted for more than two hours.
Saudi Arabia's fiscal policy strategy to deal with declines in oil revenue
⑴ Saudi Arabia's Finance Minister Mohamed Jadaan said that Saudi Arabia will reassess its spending priorities to cope with a significant decline in oil revenue. ⑵ According to the Financial Times, Saudi Arabia plans to maintain its current government spending rate despite the widening budget and current account deficits and rising debt levels. ⑶Jadaan said that as long as government spending can support non-oil economic growth, he is not worried about the deficit expanding to 3%, 4% or even "occasionally" 5% of GDP. ⑷ Saudi Arabia hopes to avoid the trap of economic "prosperity and recession" through countercyclical policies and prioritizing growth, which are key goals of its economic diversification strategy. ⑸ Saudi Arabia is increasing its oil refining business to take advantage of strong refining profits to xmserving.compensate for weak crude oil prices andThe income lost due to the decrease in exports. ⑹In view of the surge in crude oil supply and uncertainty in demand, crude oil prices are expected to remain at current levels or even lower for most of this year, and the increase in refining business provides an effective means for Saudi Arabia to deal with oil price fluctuations and long-term price wars.
South Africa's interest rate decisions face difficult choices
⑴South Africa's slowdown in economic growth and inflation below the midpoint of the South African Reserve Bank (SARB) target provide a strong basis for a rate cut on May 29, but Thursday's decision is expected to be very difficult. ⑵ Uncertainty in global economic and inflation trends may prompt South Africa's central bank to remain cautious and keep the benchmark repurchase rate unchanged at 7.25%. ⑶ Reuters survey shows that 15 of the 25 economists are expected to cut interest rates by 25 basis points, nine are expected to maintain interest rates at 7.25%, and one is expected to cut interest rates by 50 basis points. ⑷ Domestic inflation is expected to average 3.5% this year, lower than the central bank's target midpoint, but is expected to accelerate to 4.2% in 2026 and rise to 4.4% in 2027. ⑸ The economic outlook is bleak, and economists have lowered their economic growth forecasts in 2025 to 1.2% from the previous 1.7% and 1.5%. ⑹ Rand continued its long-term bull market against the US dollar, bottoming out at 19.9325 in early April, the US dollar showed a downward trend against the rand, and the daily line long upper shadow showed weakening demand. ⑺Initial support is at the May 26 low of 17.80, with the minimum technical pullback target from April to May at 18.3033, while the May 13 high of 18.4700 is a significant resistance level.
TTF prices rise in trade judgments and demand outlook boosts the market
⑴ European natural gas futures prices rose to about
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