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On May 8, CICC Research Report stated that this time the Peoples Bank of Chinas interest rate cut was a general reduction in the central interest rate. First, the 7-day reverse repurchase rate was reduced by 10bp to 1.4%; at the same time, the central bank expected that this would drive the loan market benchmark rate (LPR) down by 0.1 percentage point. As of March 2025, the balance of RMB loans was 26.5 trillion yuan, and a 0.1 percentage point reduction in the interest rate would save the real economy about 265 billion yuan in interest payment costs. Second, the interest rates of all structural monetary policy tools were reduced by 0.25 percentage points. Third, the interest rate of personal housing provident fund loans was reduced by 0.25 percentage points. With the general adjustment of the central interest rate, it is necessary to observe whether bank deposit rates will continue to adjust.May 8th news: On May 7th, Robert A. Iger, CEO of The Walt Disney Company, announced in Abu Dhabi that the worlds seventh Disney theme park will be located in Abu Dhabi.On May 8, CICC reported that the Federal Reserve kept its policy unchanged at its May meeting, which was in line with market expectations. The monetary policy statement pointed out that the risks of rising unemployment and inflation have increased, suggesting that the policy environment faces the risk of "stagflation", but since the current economic data remains solid, the Fed is not in a hurry to act. CICC believes that the Fed will not cut interest rates in the short term, especially not preemptively, and the future path of interest rate cuts will depend on tariff negotiations: if the negotiations fail to make substantial progress and tariffs remain high, the Fed may be forced to start a "recessionary" interest rate cut, or cut interest rates by 100 basis points before the end of the year; but if the negotiations achieve effective results and tariffs are reduced, the Fed may postpone the interest rate cut until December, and the rate cut will be more moderate.On May 8, Federal Reserve Chairman Powell said at a press conference that the tariffs implemented by US President Trump on April 2 local time were "far beyond expectations." The current level of tariffs may lead to a slowdown in economic growth and may lead to higher long-term inflation. "If the significantly increased tariffs that have been announced continue to be implemented, inflation and unemployment may rise and economic growth may slow. The impact on inflation may be short-lived, reflected in a one-time change in the price level, but it may also be more persistent," Powell said. Powell said that given the scope and scale of tariffs, the risk of rising inflation and unemployment will certainly increase. If tariffs ultimately remain at current levels, the Feds progress in achieving its goals may be delayed until next year.On May 8, Ken Griffin, the founder and CEO of Citadel Investments, a U.S. hedge fund tycoon, said that the American working class will bear the brunt of Trumps punitive tariffs on trading partners. "Tariffs hit the wallets of hard-working Americans the hardest. Its like a sales tax on Americans. It will hit those who work hard to make a living. Its a painful regressive tax," Griffin said in an interview on Wednesday. Griffin voted for Trump in last years U.S. election and is a big "financial backer" of the Republican Party. But he is now criticizing Trumps trade policy, saying it could damage the U.S. "brand" and its government bond market.

Silver Price Prediction: Despite higher rates and a stronger currency, silver prices will increase

Alina Haynes

Jun 02, 2022 16:25

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Despite an increase in the currency and rates, silver prices surged. Higher yields raise the opportunity cost of keeping gold and strengthen the currency, causing gold prices to decline.

 

Even with growing inflation, gold is unlikely to be a hedge if the Fed does not take the necessary steps to combat runaway inflation. The currency strengthened when rates increased.

 

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As investors continue to focus on Fed rate rises and intensifying pricing pressures, benchmark rates increase. The ten-year yield decreased by 8.2 basis points to reach 2.928%. Despite the EU prohibition on Russian oil and the lifting of limitations on the Shanghai shutdown, oil prices continued to rise.

 

The Job Openings and Labor Turnover Survey (JOLTS) data for April indicated 5,46 million job openings, a decrease of 455,000 from the previous month. Reduced the disparity between job vacancies and available workers.

 

Despite the narrowing of the difference, the result implies a tight labor market in which labor supply and demand are in equilibrium.

 

Today also saw the release of the ISM Manufacturing Index, which indicated that employers want to reduce the rate at which they hire new staff. The employment figure came in at 49.6, marking the first reading below 50 since November 2020. Relative to the labor supply, hiring will decrease.

 

These numbers are released two days before the May nonfarm payroll report. Economists anticipate an increase of 328,000 jobs from the previous month and a decline in the unemployment rate to 3.5%.

Technical Evaluation

Despite a bearish tendency, silver prices attempt to test the 10-day moving average near $21.9. As increasing inflation has become a greater concern for economists, the Fed intends to take whatever measures are necessary to curb inflation.

 

This circumstance will exert additional downward pressure on silver prices coming forward. The 50-day moving average continues below the 200-day moving average, representing a headwind for XAG/USD and indicating negative trend. Silver will likely reach the level of 20.4.

 

Resistance is seen around prior support at the 10-day moving average of 21.9. Support is seen close to the lows of the 13th of May near 20,4. As a result of the crossing purchase signal generated by the fast stochastic, short-term momentum turns positive.

 

The medium-term momentum turns positive when the histogram and MACD both show positive values (moving average convergence divergence). The MACD histogram is moving in negative area, indicating a downward trend in price movement.

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