The impact of fiscal stimulus and vaccines is fading, and the financial market will once again be dominated by monetary policy

U.S.A10The latest monthly retail sales rate data was released yesterday, indicating a slowdown in growth and a lower than expected growth rate. The continuous increase in confirmed cases in the United States and the lack of fiscal stimulus may lead to a further slowdown in this data. As a country driven by consumer spending, the monthly retail rate is a barometer of the US economy. However, it is worth noting that the unexpected low growth of this data is not only due to the loss of government financial support by the unemployed, resulting in a decrease in household income, but also indicates the cautious attitude of the public towards spending under the worsening epidemic situation.

The weakening of consumer spending momentum means that economic growth may slow down. With the hope of the second round of fiscal stimulus measures fading within the year, the short-term fundamental news for the economy and financial markets has shifted from the fiscal stimulus measures and COVID-19 vaccine that were previously concerned to the monetary policies of central banks.

The Federal Reserve may increase monetary stimulus measures next month

In the early hours of Beijing time today, Federal Reserve Chairman Powell stated that it is not yet time to halt the emergency plan previously implemented. Currently, the number of cases has surged again, and there is still a long way to go for economic recovery. Many plans were originally scheduled to expire at the end of the year. Powell stated that he believes12month31These plans may still be needed in the future.

(Monthly retail sales rate in the United States over the past year)

In an environment where there is no hope for fiscal stimulus policies, the Federal Reserve may discuss whether to increase monetary stimulus measures to maintain economic growth in next month's interest rate resolution. But given the current global liquidity of the US dollar, the Federal Reserve is more likely to respond to the impact of the second pandemic on the economy through interest rate control curves.

(The continuous decrease in the amount of US dollar swaps between central banks means that global US dollar liquidity is currently stabilizing)

The European Central Bank increasesQEMore determined

The European Central Bank10In the monthly interest rate resolution, it was stated that12At the monthly policy meeting, a particularly clear commitment was made to the launch of the new monetary stimulus plan. The European Central Bank's administrative policy rate is at a record low point-0.5%At the current level, interest rate cuts have become the least likely means. It is more likely to increase the amount of bond purchases.

3The European Central Bank implemented a scale in the month of the pandemic crisis1.6Trillion dollar emergency bond purchase plan for the pandemic. The purpose of this plan is to purchase bonds from countries severely affected by the epidemic to alleviate the financial pressure on the government. As of10Only half of the month was used.

The European Central Bank intends to increaseQEThe main purpose of this action is to prevent the economy from falling into a double recession. The second wave of the epidemic has forced eurozone member countries to once again block their economies, putting downward pressure on the economy. At the same time, the euro exchange rate has always been at a high level, which is undoubtedly adding insult to injury for the eurozone economies. The appreciation of the euro is undoubtedly suppressing the export industry.

The relationship between the European Central Bank and the Federal ReserveQEStrength will affect numerous assets

US stocks andgoldOne of the main factors behind the impressive performance in the epidemic is that the Federal Reserve's crazy release of water has driven funds into risky assets such as the US stock marketQEThe intensity of the measures further increased the inflation expectations in the United States, and gold, as a classic anti inflation commodity, also opened up an upward trend.

(Gold daily chart, sourceGKFXPrime MT4）

11In the latest interest rate resolution of the Federal Reserve of Australia, it has chosen to adjust its monetary policy. Interest rate cuts plus a new round1000AUD billionQEThe plan brings market confidence in the Australian economy, with the Australian dollar fluctuating on the same day170Multiple points, and a period of upward trend has begun.

In the short term, the relationship between the European Central Bank and the Federal ReserveQEThe intensity is bound to be similar to that of the Federal Reserve of Australia, causing market volatility as usual. However, it should be noted that in a situation where inflation expectations remain sluggish,QEWhat it brings is an expectation of economic growth. But once inflation begins to show signs of rising, the increase in bond purchases will suppress the downward trend of the exchange rate.

If the US dollar rebounds after the interest rate resolution, it will inevitably drive down the prices of gold and cyclical asset copper. Waiting for the Federal Reserve and central banks of various countries to announce next month12Changes in monthly monetary policy.

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