“The only constant in life is change”-Heraclitus
Federal reserve pulls plug on Fed’s emergency schemes. What does this mean to the current market dynamics
The dollar halted its week-long slide on Friday after U.S. Treasury Secretary Steven Mnuchin told the Federal Reserve to return money earmarked for pandemic lending to businesses, nonprofits and local governments.
While the move was aimed at re-appropriating some $455 billion allocated to Treasury under the CARES Act in the spring. So Now this 455 Billion Dollar in no longer available for Pandemic Relief.
Investors have banked on the MLF (Municipal Liquidity Facility) being a reliable, emergency lender to our (municipal bond) market’s core borrowers. It has taken the idea of a payment default or catastrophic budget problem off the table.
With the stopping of this funding Risk of payment default or catastrophic budget problem has reemerged.
We expect Risk off sentiment to come back making Dollar Stronger, Risk Assets like Stocks may see a correction . Oil is also likely to go down . Gold and Silver is expected to Shine.
With the change of guard in United states, policies are bound to change and we should be geared to embrace the change because Change only constant in life is change
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