Time for greenbacks to return to India? For clues, look to Warren Buffet
shockwaves through the market. India, while fundamentally strong, is not immune to these external headwinds. Earlier this quarter, Buffett had already offloaded stocks in Bank of America and BYD, boosting his cash reserves to $280 billion.
Buffett's preference for cash over stocks sends a clear signal: expect falling stock prices, rising bond prices, and new investment opportunities, underscoring the need to maintain liquidity. Read this | Warren Buffett’s cash pile soars. What it could mean for you. The market now anticipates an emergency meeting of the US Federal Reserve's Open Market Committee before the scheduled 18 September meeting, potentially announcing an immediate rate cut.
US unemployment, previously at its lowest since the 1960s, is rising again, hitting 4.3% in July after breaching 4% in May and climbing to 4.1% in June. There is a growing sentiment that the Fed has delayed rate cuts too long, having missed the opportunity at its last meeting in July. This anticipation has rippled across global markets, exacerbated by the Bank of Japan's (BoJ) decision on 31 July to raise rates for the second time this year to 0.25%, up from the 0-0.1% range set in March.
The BoJ's concerns about the yen's weakening against the dollar and rising domestic inflation, though only at 2.6%, prompted this move. The March rate hike ended a negative rate regime that began in 2016 and marked the first BoJ rate increase in 17 years. When interest rates rise in Japan, the carry trade unwinds.
With Japan’s historically ultra-low rates, investors have borrowed in yen to invest in higher-yielding currency assets. However, as the BoJ hikes rates, the interest differential between yen and dollar assets narrows. Investors, seeing reduced
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