Tag Archives: Federal Reserve’s

A decline in US Stock Markets Amid Economic Expectations

A decline in US Stock Markets Amid Economic Expectations: The US stock market indices saw a significant decline
amidst growing speculation that the market exceeded logical limits following the US elections,
diminishing bets on the Federal Reserve’s continued rate cuts.

Content

Loss of Momentum in Stocks
Treasury and Dollar Performance
Analysts’ Market Views
Fed Expectations and Inflation Impact
Divergence in Major Indices
Expert Opinions
Inflation and Economic Policies

Future Market Movements

 

 

 

 

 

Loss of Momentum in Stocks

 Stocks lost momentum in the final hours of trading in New York,
with the S&P 500 index nearing erasure of gains achieved partially due to inflation data that met expectations.
Despite Cisco Systems‘ optimistic outlook for the current period,
its cautious annual forecast did not have much impact on investor response.

 

Treasury and Dollar Performance

 Short-term Treasury bonds outperformed,
with the yield on two-year bonds dropping from its highest level since July.
The probability of a rate cut in the December 18 meeting rose to around 80%.
The dollar remained at a two-year high, while Bitcoin pared its gains after surpassing $93,000 earlier.

 

Analysts’ Market Views

 Brett Kenwell of eToro noted that the markets have risen since the elections,
solidifying a mindset of buying on dips.
He pointed out that potential short-term selling may be limited as fund managers seek to improve performance by year-end.

 

Fed Expectations and Inflation Impact

 Consumer Price Index data emphasized the ongoing uncertainty
among Federal Reserve officials regarding the extent of needed rate cuts,
reflecting the policymaking challenges.

 

 

 

 

Divergence in Major Indices

While the S&P 500 index showed little change,
the Nasdaq 100 fell by 0.2%, and the Dow Jones Industrial Average rose by 0.1%.
Ten-year Treasury yields increased by two basis points to 4.45%.

 

Expert Opinions

Seema Shah of Principal Asset Management believes stronger-than-expected
inflation may lead to steady rates at the next meeting.
Other analysts noted that high inflation continues to influence economic policies,
posing challenges to easing monetary efforts.

 

Inflation and Economic Policies

 Ellen Zentner of Morgan Stanley suggested that markets
are currently pricing in a lower probability of rate cuts than previously expected,
with the possibility of the Fed pausing in January.
Jeffrey Roach noted that persistent inflation components could allow for a December rate cut, with a potential pause in January.

 

Future Market Movements

Citi Group analysts highlighted that the focus has shifted to Nvidia’s upcoming earnings report,
which is seen as a major market event.
This illustrates the contrast between concerns over macroeconomic data and the emphasis on the tech sector.

 

A Decline in US Stock Markets Amid Economic Expectations

Steel Continues to Decline to Its Lowest Level in 7 Years

Steel Continues to Decline to Its Lowest Level in 7 Years: In late July, the price of rebar futures fell below 3,100 Chinese yuan per ton,
reaching its lowest level in over seven years amid weak demand and abundant supply in China, the largest consumer.

 

Content

Oil Prices

Steel
Next Week

 

 

 

 

Oil Prices Close Lower Due to Chinese Demand Concerns

West Texas Intermediate crude oil futures fell by 1.4% to settle at $77.16 per barrel on Friday,
marking a third consecutive weekly decline due to weak Chinese demand despite positive U.S. inventory data.
Concerns about economic growth in China, highlighted by interest rate cuts in Beijing to stimulate the economy,
negatively impacted market sentiment.
The decline in China’s oil imports and refinery activity due to slowing economic growth affected prices.
Furthermore, ceasefire talks between Israel and Hamas eased supply concerns, adding more pressure.
Meanwhile, strong economic growth in the United States in the second quarter
Rising expectations of a potential federal interest rate cut in September could boost oil demand.
On Wednesday, the U.S. Energy Information Administration reported
a larger-than-expected decline in U.S. crude inventories by 3.7 million barrels and a significant drop in gasoline inventories by 5.6 million barrels.
Market watchers are divided on whether OPEC+ will ease production restrictions in the next quarter,
with a meeting scheduled for August 1.

 

Steel Continues to Decline to Its Lowest Level in 7 Years

The price of rebar futures fell below 3,100 Chinese yuan per ton in late July,
reaching its lowest level in over seven years amid weak demand and abundant supply in China, the largest consumer.
The Chinese government imposed new quality standards for rebar to take effect in late September,
prompting mills and traders to flood the market with old stock before the new standards for the metal took effect.
Meanwhile, China’s economy grew less than expected in the second quarter,
and housing prices fell to their lowest level in June of nine years, highlighting the severity of the real estate crisis in China.
The data weakened expectations for future construction activity.
They increased the likelihood of liquidation by debt-laden real estate developers in China,
erasing a key source of global demand and Chinese economic output.
The downturn caused by the housing recession prevented the Chinese government from aiding real estate developers,
as such measures would exacerbate the current oversupply of housing.

 

 

 

Next Week – July 29

In the United States, key events will include the Federal Reserve’s interest rate decision and the non-farm payroll report.
Other significant events include job openings in JOLTs, consumer confidence from CB,
the ISM manufacturing PMI, factory orders, the S&P Case-Shiller home price index,
pending home sales and the employment cost index.
The earnings season will enter one of its busiest weeks,
with giant companies like Microsoft, Meta, Apple, and Amazon taking center stage. 

On the other hand, the Bank of England, the Bank of Japan,
and the Central Bank of Brazil will provide updates on their monetary policies.
Inflation rates will be released for Spain, Germany, Australia,
the Netherlands, France, Poland, the Eurozone, Italy, South Korea, and Switzerland.
GDP growth rates will also be announced for France, Spain, Germany, Italy, the Eurozone, and Mexico.
In China, manufacturing and services PMI indicators will be closely watched.
Manufacturing PMI indicators for South Korea, Russia, Spain, Italy, and Canada will also be published.

 

Steel Continues to Decline to Its Lowest Level in 7 Years

The UK economy enters a recession in the fourth quarter

The UK economy enters a recession in the fourth quarter: The UK economy contracted by 0.3% in the last quarter of 2023,
entering a technical recession for the first time since the aftermath

of the COVID-19 outbreak in the first half of 2020

 

Content

The UK economy enters a recession in the fourth quarter.

The dollar has risen since the Federal Reserve’s recent statements.

The yen stabilises with Japanese authorities’ warnings of intervention.

 

 

 

The UK economy enters a recession in the fourth quarter

The UK economy contracted by 0.3% in the last quarter of 2023, entering a technical recession
for the first time since the aftermath of the COVID-19 outbreak in the first half of 2020,
with rising inflation, record borrowing costs, and weak foreign demand. On an annual basis,

the British economy contracted by 0.2% in the fourth quarter.

 

The dollar rose after the Federal Reserve’s recent statements

The dollar index rose around 104.4 and is hovering near its highest levels in six weeks,
supported by hawkish statements from a Federal Reserve official.
On Wednesday, Federal Reserve Governor Christopher Waller said the central bank
might backtrack on cutting interest rates amid strong inflation data.

The markets see a 60% chance of a Federal Reserve interest rate cut in June,

down from about 70% last week.

Investors are now looking forward to the latest report on the U.S. personal

consumption expenditures price index on Friday,
which is the Federal Reserve’s preferred inflation measure.

 

 

The yen stabilises with Japanese authorities’ warnings of intervention

The Japanese yen stabilised near 151 yen to the dollar,

recovering somewhat after falling to its lowest level 34 years earlier this week

with Japanese authorities indicating their readiness to intervene in currency markets.
Finance Minister Shunichi Suzuki warned that “decisive steps” would be taken against excessive currency movements.
Masato Kanda, the top currency diplomat, said he “would not rule out any steps to
respond to disorderly movements in the currency market.”

The yen’s rapid decline came amid speculation that the Bank of Japan’s monetary policy
remained accommodative despite the recent shift against negative interest rates.
Bank of Japan board member Naoki Tamura recently stated that the risk of inflation sharply exceeds,
and the demand for the central bank to tighten monetary policy quickly remains low.

 

The UK economy enters a recession in the fourth quarter:

The effect of the US Federal Reserve’s tightening speech

The effect of the US Federal Reserve’s tightening speech on gold and the dollar:
Today, the markets are awaiting the monetary policy meeting in the United States of America,

and the bank will likely keep the interest rate as it is without any change, around 5.5%.
Will the decision affect gold and the dollar and how?

 

Topics

 

Australian consumer prices

CB Consumer Confidence

The US Federal Reserve’s tightening speech

 

 

 

Australian consumer prices respond to monetary tightening programme

 

During Wednesday’s trading, Australian consumer prices presented data that the Bank of Australia will see as a good range.
The Bank of Australia, which is following a monetary tightening program
and raising interest rates to bring back Australian inflation, targets the bank around 2.0%.

Annual consumer prices: presented a negative reading and declined by around 3.4%.
It is worth noting that expectations were indicating 3.7%,
while the decline came from very high levels around 4.3%.

When the quarterly core consumer prices presented a contradiction to expectations that indicated a presentation of 0.8%
and achieved a lower negative reading than the reading around 1.2%,
it declined and settled around 0.6%, which is a very negative reading.

Australian quarterly core consumer prices also provided a negative reading, settling around 0.8%.
It is worth noting that the reading that preceded them was around 1.2%, contradicting expectations that were indicating 0.9%.

All of this puts the Bank of Australia in a good position,
as Australian inflation has already responded by declining through the adopted tightening file,
which may push the bank to reduce the Australian interest rate early during the current year.

 

What did American CB Consumer Confidence provide to the markets?

 

During yesterday’s trading, we witnessed data issued by the United States of America,
which presented the American Consumer Confidence Index, which was conducted on approximately 5,000 households,
asking participants to express their opinions on the current state of the economy and what are the upcoming events that they expect.

Consumer confidence presented a positive reading, contrary to expectations that were indicating 114.2, to settle around 114.8,
thus contradicting expectations and adding more positivity, as the previous reading was around 108.0.

A succession of positive data from the United States supports the positivity of the index’s movements from the beginning of the year until now,
as it is now trading around 103.20, awaiting the most important data and monetary policy report issued by the US Federal Reserve for January.

 

 

 

The US Federal Reserve and how both gold and the dollar will be affected in light of a tightening speech

The US Federal Reserve has taken the year 2023 to fight high US inflation, bringing interest rates to the highest levels of around 5.5%.
It is noteworthy that US Federal Reserve Governor Jerome Powell gave, in the last meeting of 2023 in December,
an indication of the possibility of the US Central Bank’s victory in fighting high inflation, while hinting at the start of reduction during the current year of 2024,

Today, the markets are awaiting the monetary policy meeting in the United States of America,

and the bank will likely keep the interest rate as it is without any change, around 5.5%.

We are awaiting how the Federal Reserve viewed the data issued during the last period regarding the rise in annual American consumer prices to 3.4%,

and whether the positive labor market is putting pressure on it. On inflation again, pushing it higher,

we are all waiting to find out when it will start and how much the US Federal Reserve will reduce during the current year.

 

The effect of the US Federal Reserve’s tightening speech