On Friday, President Donald Trump unveiled who he wants to see as the new head of the Federal Reserve, the US central bank.
It is well known by now that Trump wants to see significantly lower interest rates. But the proposed head, Kevin Warsh, may not be seen as pushing the interest-rate-cut button so hard after all.
The effect was a stronger dollar and thus also a significant price drop in gold and silver, but also commodities in general. The fact is that these prices were significantly driven up as investors sought to move away from the normally safe dollar.
“Market relief”
"The market is probably a bit relieved that there might not be such a radical restructuring, but we don't know," says Mattias Persson.
"The credibility-stricken and shabby US dollar received some 'Kevin' support, on hopes of a continued politically independent Fed - and thus perhaps fewer interest-rate cuts," SEB writes in its market letter.
"Warsh is a relatively uncontroversial choice and he is not expected to follow Trump's lead, even though he has also said the policy rate should be lowered," writes Maria Landeborn, senior strategist at Danske Bank.
But the question still remains: Where does Kevin Warsh's loyalty lie, with President Trump or with the Fed, the analysts wonder?
The price of gold and silver has plummeted 20-30 percent in just a couple of days.
"What I hear is that these are very speculative positions, and they have spillover effects into other markets," says Mattias Persson.
“I feel no anxiety”
Persson doesn't really think that much else has happened.
"Unless something else comes along, I see it more as a one-off effect that leads to corrections in markets globally," Persson says.
Stock exchanges in Asia saw significant falls, in South Korea so large that trading was halted. But on the Stockholm Stock Exchange the decline was more moderate, about one percent in early Monday trading.
"I don't feel any concern at the moment, anyway," says the Swedbank economist.
