How Long Can Cash Stay King?

How Long Can Cash Stay King? By Hardika Singh

Cash stockpiles have skyrocketed since the Federal Reserve started raising interest rates, but investors must decide whether to sit on their cash or redistribute it ahead of expected rate cuts. Meanwhile, economists point out the main differences in Biden and Trump's trade policy agenda regarding China. And investors allege former FTX customers reneged on selling claims to their accounts and are suffering from seller's remorse. Read on for this news and more.

Top News Americans Chasing High Rates Risk Falling Into a 'Cash Trap'

Americans have been piling into cash-like investments since the Fed began hiking rates two years ago, with a record $6.12 trillion parked in money-market funds. Now with most Fed officials forecasting one to two cuts this year, those investors face a key decision: what to do with their cash stockpiles .

Singh's Take: Housing Sector Slump Persists, With Little Relief in Sight By Hardika Singh

The housing market's tough year isn't getting any easier. Investors and strategists say a turnaround is unlikely anytime soon , at least until the Federal Reserve cuts interest rates.

But that might still be some time away. At their latest meeting, central bank officials offered little evidence that they were prepared to begin lowering rates and penciled in just one rate cut this year.

U.S. Economy How Trump and Biden's Trade Wars With China Differ

President Biden and former President Trump both support greater trade barriers with China, but economists point to key differences in their plans and what they would mean for U.S. consumers. [Video]

Financial Regulation Hedge Funds Made a Killing on FTX-Then It Got Complicated

Since FTX's 2022 implosion, hedge funds had scooped up the rights to customers' frozen accounts for pennies on the dollar, with five firms alone buying claims with a combined face value of about $2.4 billion. That meant a huge payday was in store.

But collecting these winnings won't be straightforward . Investors are mired in legal battles with some of the original owners of the claims.

Forward Guidance Tuesday (all times ET)

8:30 a.m.: Canada consumer price index

9 a.m.: S&P CoreLogic Case-Shiller Indices

10 a.m.: Consumer confidence

12 p.m.: Economic Club of New York event with Fed Governor Lisa Cook

Wednesday

10 a.m.: New home sales

4:30 p.m.: Fed Board releases annual bank stress test results

Research Brazil Investors Fear Political Influence on Rates, Economy

Investors' fear of political influence over Brazil's monetary decisions eased somewhat after last week's unanimous central bank decision to pause its easing cycle. However, more is needed to bolster sentiment among equity investors, TS Lombard's Jon Harrison says in a note. Brazil's President Lula da Silva has been a vocal critic of the central bank's hawkish stance and he is set to appoint a new governor next year. Improved sentiment "will likely require a further reduction of political interference" in monetary policy and in the wider economy," Harrison says. Meanwhile, "high interest rates will continue to weigh on equity valuations." - Paulo Trevisani

Basis Points Federal regulators have raised doubts about how some of the biggest banks in the country would try to wind themselves down in the event of a failure. The Fed and the Federal Deposit Insurance Corp. said wind-down plans from JPMorgan Chase, Bank of America, Goldman Sachs and Citigroup all had weaknesses, raising questions about their feasibility . The plans, known as living wills, detail how they would wind down operations and repay creditors if they went bust. - Alexander Saeedy and AnnaMaria Andriotis Federal Reserve Bank of Chicago President Austan Goolsbee on Monday laid out a dovish case for considering potential cuts in interest rates in coming months. In an interview on CNBC, Goolsbee said there are new signs of stress on the economy that should make the U.S. central bank at least wonder if its policy rate needs to be as high as it currently is. - Greg Robb San Francisco Federal Reserve President Mary Daly sees more work for higher interest rates to do to slow demand and inflation in the U.S. economy. She said the Fed is ready to respond to both a softening labor market that needs a boost and to inflation remaining stuck above its target-but it's unclear which scenario is more likely. - Nicholas Jasinski The Bank of Canada is looking for wage growth-which is well above the prepandemic average- to slow further as slack accumulates in the economy, Gov. Tiff Macklem said Monday. Macklem said six-month gauges of pay increases indicate that wage momentum is waning. - Paul Vieira The yen again approached a three-decade low against the dollar Monday, drawing a verbal warning by a Tokyo currency official. Less than two months after Japan spent more than $60 billion to prop up the yen, the currency's gains have disappeared , as traders revert to the view that the interest-rate gap will stay wide between the U.S. and Japan. - Megumi Fujikawa

The European Union slapped a raft of new sanctions on Russia over its full-scale invasion of Ukraine, targeting the Kremlin's liquefied natural gas shipments for the first time. The sanctions package-the 14th since the outbreak of the war in 2022- bans the re-export of Russian LNG shipments destined to third countries through EU ports, covering ship-to-ship and ship-to-shore transfers, as well as re-loading operations. - Giulia Petroni

About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [[e-mail]].

This article is a text version of a Wall Street Journal newsletter published earlier today.

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06-25-24 0715ET