QE (Quantitative Easing) is an unconventional monetary policy tool used to stimulate the economy during a recession or deflation. Its main goal is to increase the money supply and lower interest rates to boost economic growth and inflation. QE typically involves the central bank purchasing government bonds and other financial assets to inject more liquidity into the financial system.
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Market direction will be clearer after U.S. market opens. Pre-market futures are down significantly, which might affect the broader market, but if emotions and selling subside, the market will stabilize. I won’t short the market; I’m focused on my performance in crypto, euros, yen, and U.S. Treasuries. Rate cuts won’t immediately lead to QE, which generally appears at low or zero interest rates and after about 16 months of rate cuts.
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U.S. stocks have been open for over an hour, with the Nasdaq leading, followed by the S&P, and then the Dow Jones and Russell 2000. Gold is slightly down, and the 10-year Treasury yield is up. The main focus is tonight’s PPI data, which is expected to positively impact inflation and corporate profits, although it also increases rate cut expectations. CME data shows a 54.5% chance of a 50 basis point rate cut in September. Current positive sentiment in U.S. equities hasn’t yet extended to the crypto market. If risk sentiment in equities improves, the crypto market might see some gains overnight or at the close, though likely limited. Tomorrow’s CPI data remains crucial.
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