The charts that matter: markets cheer Powell’s inaction

Markets were holding their breath for most of the week ahead of the Fed's Jackson Hole Symposium but in the end they cheered Chair Jay Powell's inaction. Here’s what’s happened to the charts that matter most to the global economy.

Welcome back. 

In this week’s magazine, we explore the investment opportunities in outsourcing. The sector has seen more than its fair share of blunder and scandal, to the benefit of neither shareholders nor voters – and yet slow but steady improvements mean now may be the time to invest, says Jonathan Compton. Find out what he has to say in this week’s magazine – if you’re not already a subscriber, sign up for MoneyWeek magazine now.

This week’s “Too Embarrassed To Ask” video looks at metaverse. The term “metaverse” sounds like something out of a science fiction novel (and it is). But what does it actually mean (it’s not just crypto though that’s involved)? Find out here. 

And in the podcast this week, Merryn and John talk about what lies behind the shortages we’re facing in everything from chicken to microchips – is this really a once-in-a-lifetime disaster, or is it just because we’re suddenly paying a lot more attention to how the supply chain works? We also look at why now might be a good time to follow private equity into the UK. Find out what they have to say here.

Here are the links for this week’s editions of Money Morning and other web articles you may have missed:

Now for the charts of the week. The big event turned out to be a more dovish-than-expected speech from Jerome Powell at Jackson Hole, last thing on Friday.

Gold rose this week as investors bet that rising Covid-19 cases could deter the US Federal Reserve from announcing taper plans at the Jackson Hole Symposium – which, as it turns out, is what happened.

gold

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) rose ahead of Powell’s speech but lost ground in its wake as Powell noted that interest rates weren’t likely to rise in anything like the near future.

us dollar

(DXY: three months)

The yield on the ten-year US government bond was higher ahead of the speech (yields move inversely to the price of bonds).

US 10 year yield

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond also rose a little ahead of Jackson Hole. 

Japanese yield

(Ten-year Japanese government bond yield: three months)

And the yield on the ten-year German Bund followed the direction of US bonds.

Bund

Ten-year Bund yield: three months)

Copper prices were steady ahead of the Fed's symposium and then jumped higher as the dollar fell back on Powell’s relaxed tone.

Copper

(Copper: nine months)

The closely-related Aussie dollar rose over the course of the week.

AUD

(Aussie dollar vs US dollar exchange rate: three months)

Bitcoin rose a little after the crypto market received a boost on news that PayPal, one of the world's largest payment processors, is allowing UK account holders to buy and sell crypto.

bitcoin

(Bitcoin: three months)

US weekly initial jobless claims' 4-week moving average was 366,500, a decrease of 11,500 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500

US weekly claims

(US initial jobless claims, four-week moving average: since Jan 2020)

The oil price rose for most of the week after US government data indicated fuel demand shot up to its highest level since before the pandemic began.

brent

(Brent crude oil: three months)

Amazon rose on the previous week, slightly reversing the recent decline.

amazon

(Amazon: three months)

And Tesla remained volatile, ending the week little changed.

tesla

(Tesla: three months)

Have a great weekend. There won’t be a Money Morning on Bank Holiday Monday but we’ll be back on Tuesday.

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