Thursday, August 20, 2015

Why the US Fed will not raise rates next month

The world is run by central bankers and when investors see that central bankers are essentially engaged in some kind of money printing exercise, which currency devaluation is, then obviously it affects other currencies as well and because of the size and the importance of the Chinese economy, it puts further pressure on other emerging market currencies.

Having said that, the US dollar is relatively high against emerging market currencies and also against the Euro and this strength in the US dollar is obviously damaging the US to some extent. Therefore, I do not believe that the Fed will increase rates in September. 

The bond market in the US has been very strong, it has rallied in the last two weeks, which suggests that the economy is weak not strong.