19th August 2022: Yesterday trading signals are given -3.461%; Strengthening NATO in Romania; Demand for the US dollar is growing; The recession of the German economy
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Strengthening NATO in Romania
The North Atlantic Treaty Organization (NATO) is rushing to counter Russia’s threat in Europe’s weak spot. Six months after Putin’s invasion of Ukraine, efforts to strengthen the region around the Black Sea have raised questions about why it wasn’t done earlier. The Black Sea is a prominent geographical feature that separates Europe and Asia. Russia, Ukraine, Romania, Bulgaria, Turkey, and Georgia are bordered on all sides. Through the Bosphorus Strait in Turkey, it connects to the Mediterranean Sea, making it an important commercial route for agricultural products originating in Ukraine and Russia. According to a security analyst working for Stratfor, Moscow has placed a higher priority on southeastern Europe.
The Black Sea serves as Russia’s entry point for projecting strength and might into the Middle East, Africa, and other regions further afield. The number of NATO allies stationed along the alliance’s eastern borders has increased noticeably in recent months. In 2004, Romania and Bulgaria became NATO members, three years before joining the European Union. They are still attempting to narrow a money gap with their more prosperous partners, hindering their efforts in various areas, including helping refugees find housing and assisting Ukraine in exporting grain.
France: “We are preparing to be able to fight side-by-side with the Romanians, the United States, and any other contingents that may be present.” A little more than 950 kilometers of roadways put Romania in last place among the EU member states in terms of the percentage of highways per population. Most of the NATO countries have long since fallen short of the alliance’s target of devoting at least 2% of their domestic product to their military budgets. However, Romania has been prosperous in meeting that objective since 2015 and plans to expand it to 2.5%. The price tag for the purchase of military supplies is expected to be at least 12 billion euros ($12.2 billion).
Demand for the US dollar is growing
After a chorus of Federal Reserve officials reaffirmed their resolve to continue rate hikes and traders raised tightening wagers for other major central banks, futures for US equity indices fell in tandem with Treasuries. This was in response to the Fed’s announcement that it would continue to hike interest rates. The yield on the two-year Treasury note rose by five basis points, while the dollar’s value was on track for its most significant weekly gain since the 10th of June. After a considerable investor sold his investment, Bed Bath & Beyond’s stock dropped by 42% in premarket trading in New York. On Friday, prices for all maturities of Treasury bonds went down. The money markets have increased their wagering on the likelihood of central banks tightening monetary policy, giving a 40% chance of a rate rise of 75 basis points by the Federal Reserve in September and a 33% chance of a similar increase by the Bank of England.
The Federal Reserve’s quantitative easing, which is about to pick up the pace to an annual rate of one trillion dollars next month, is one factor that is making people’s attitudes worse. The Bloomberg Dollar Spot Index has gained ground on five of the previous six trading days, putting it in position to post a gain of 1.8% this week. The resurfacing of long-dormant geopolitical tensions helped boost demand for the US dollar as a haven investment. Expiring options worth $2 trillion can stir up volatility in global markets. Inflation will continue to be the indicator that receives the most attention in the second half.
The recession of the German economy
In the industrial heartland of Europe, producers of auto components, chemicals, and steel are struggling to absorb electricity rates that rocket to new highs virtually every day, which might lead to an exodus of these businesses. The cost of electricity and gas in Germany has more than quadrupled in only two months, with the price of year-ahead power surpassing 540 euros ($545 per megawatt hour). Back in 2016, the price was forty euros. Because German industry relies on Russian natural gas, Germany is expected to have the worst performance among the Group of Seven nations this year. Compared to the previous year’s time, the first half of this year saw a roughly 27% increase in the total volume of chemical imports. A paper factory owned by the packaging company Delkeskamp Verpackungswerke GmbH is about to be shut down.
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