About the hawks and doves
Good morning. I am Kitsune no Me to Moushimasu.
Yesterdayabout “Fundamental”I wrote.
Today,“Dovish”and“Hawkish”I will describe.
Nice to meet you.
In news or on social media, you may have seen phrases like“hawkish statements”or“hawkish people”
These terms have real meanings and can influence forex and stocks.
1. What is a hawk
Dove = symbol of peace
In particular,“white dove”is considered a symbol of peace.
This is said to originate from the Bible.
In the Old Testament, God intended to destroy fallen humanity with a great flood.
However, Noah was told by God in advance about the flood and built the so-called“Noah's Ark”to escape with the animals.
Afterward, Noah releases a dove to check whether the flood has subsided.
Soon, the dove returns with an olive leaf, signaling that the flood is over.
The white dove appears in other myths as well and is said to have become a symbol of peace and love.
This gave rise to“hawkish”in my view, though I’m not sure of the exact origin.
In other words, “hawkish” refers to“the people are currently hoping for peace.”as a feeling or stance.
Wanting peace = not currently peaceful = risk-on
Hawks favor lowering short-term interest rates to support the economy.
Therefore,“quantitative easing”and“rate cuts”“monetary easing policy”.
This policy is generally positive for the economy and stock markets, but it carries the risk of rising inflation.
2. What is a hawk
“Hawk”is a term that originated in the United States.
In 1798, then-U.S. President Thomas Jefferson referred to the opposed Federalists as“War Hawk (hawks of war)”as the origin of the expression.
This was a taunt likening an aggressive stance that advocated war with the predatory bird, a hawk.
Hawks aim to raise interest rates to curb inflation.However, raising rates can increase borrowing costs for companies and dampen the economy.
Thus, rate hikes can have a negative impact on the stock market.
Moreover, a country that raises rates tends to attract foreign money seeking higher yields.
A hawkish predatory bird = currently aggressive = danger! = risk-off
This is how I remember it.
It often turns out the opposite...
That concludes the explanation of “hawkish” and “dovish.”
I included this before detailing the concrete content because it is essential knowledge for explaining fundamentals.