By Simone Wapler – Strategy of Simone Wapler (France) – Janet Yellen, head of the Fed, has finally raised its key rates. It didn’t surprise many. However, hints about more rate increases in the future – three potential increases in 2017 – surprised many.
After hearing the news, we saw:
- The euro plunge;
- European shares to go up – the fall in the euro is supposed to favor euro area exports of European companies;
- Gold and silver plunge (as the dollar strengthens and stocks attract investors);
- Long bond yields continue to rise
These massive swings in the currency markets are really a red herring, designed to divert our attention.
The bottom line is that in a world of over-indebtedness, a return to normal is never on the agenda, regardless of what the Fed suggests.