I doubt the Fed predicted the market carnage following its ‘hawkish’ cut last week. US bond yields plunged by over 35bps – the largest drop since 2011 when the Euro-area crisis was erupting – and equities fell over 5%. The dollar also rallied, notably against the Chinese renminbi which broke the 7 level. Admittedly it wasn’t just the Fed that triggered these moves. The escalation of the US-China trade war also contributed. Moreover, illiquid markets probably exacerbated the moves, something we covered in one of our specials last week…
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.