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Market Round Up: US GDP gee-up & In the Greenback we trust

by | 27 Jul, 2018

1. U.S GDP gee-up

The U.S. reports its initial gross domestic product (GDP) figures later today, with estimates suggesting expansion comparable to 2014.
With GDP growth anticipated to top 4% quarter on quarter, it will affirm the Fed’s current policy path to gradual interest rate rises. However, many analysts believe this positive signal is a one-time effort, with growth numbers expected to moderate in subsequent quarters.
Meanwhile, markets will be hoping for a continuation of robust corporate results during this earnings season in order to bring further reprieve to stocks troubled by trade war fears.

 

2. In the Greenback we trust, but for how long?

For decades the good old greenback has been the linchpin of the post-Bretton Woods monetary era. It has mattered to more than Americans that the world’s reserve currency be stable. And it has always been assumed that it was in Americans’ own interest to keep it so.

However, Trump’s latest wheeze is to devalue the dollar and, by extension, global U.S. debt. Why? It seems Trump is peeved that everybody, but especially China, uses the dollar and U.S. Treasuries as safe havens. As a reserve-status, it means the U.S. current account is always in deficit. But by design, it also means the U.S. maintains its top-dog status. This means the dollar is never subject to the normal rules that beset other countries – such as a ratings downgrades due to its $20 trillion national debt.

So would Trump upset his country’s triple A rating? Let’s hope not as the world continues to trust in the greenback. After all, what would be the alternative? The Yuan, Yen or the Euro? Or even back to the old days of gold?

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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