Christmas is just around the corner, and it is believed that Santa Claus is warming up his sleigh in preparation for his big night. This is a popular speculation among holiday enthusiasts, but what other financial changes are taking place, as the New Year approaches?
The Federal Reserve is one institution that will be watched closely as the New Year rings in. With the reserve expected to expand its balance sheet by another $2 trillion in 2020, this could have an interesting effect on global markets. Many analysts believe the additional money supply could lead to higher inflation, a slowing of economic recovery, and even a stock market crash.
Those concerned with the potential economic impact of the Federal Reserve’s decisions should also keep an eye on the bond market. Bond yields, which measure the debt of a government, have been steadily declining over the last few years. This means that governments have to pay less interest to borrow money, a trend that may continue in the coming year. Lower yields can also indicate that investors are expecting weaker growth or inflation to come later in the year.
In addition to understanding the Federal Reserve’s moves and the bond market, investors should also be on the lookout for any changes to the cost of borrowing money. This could have an effect on businesses as well as consumers, making it important to stay informed.
As we enter the New Year, investors should be aware of all of the financial changes that may be taking place in the background, not just the speculation about Santa Claus getting ready to fly. While it is difficult to predict how these changes will affect global markets, the smart investor will keep their eyes and ears open to ensure they are well-positioned for a successful year.