During the Asian session on Friday (March 3), the US dollar index fluctuated within a narrow range and is currently trading around 104.94. The U.S. dollar rose 0.57 percent on Thursday, after earlier jobless claims data showed the U.S. job market remains strong, and other data showed rising labor costs, suggesting the Fed will have to do more to raise interest rates to curb inflation. The yield continued to climb, and the yield on the ten-year U.S. Treasury bond set a new high in nearly three and a half months to 4.091%. Suppressed by the U.S. dollar and U.S. debt, gold prices paused their rebound on Thursday and closed at $1,835.65 an ounce, down 0.05% after rising for three consecutive trading days.
Commodity closing situation, Brent crude futures settled at $84.75 a barrel, up $0.44, or 0.5%. U.S. crude futures settled at $78.16 a barrel, up $0.47, or 0.6%. U.S. gold futures fell 0.18% to $1,845.40 an ounce.
Closing of US stocksthe Dow Jones Industrial Average rose 341.73 points, or 1.05%, to 33,003.57; the S&P 500 rose 29.96 points, or 0.76%, to 3,981.35; and the Nasdaq rose 83.50 points, or 0.73%, to 11,462.98.
friday preview
US stock market
U.S. stocks rallied to end higher on Thursday, while U.S. bond yields retreated from earlier highs after comments from Atlanta Fed President Raphael Bostic on the path he favors for raising interest rates.
Bostic said the economic impact of U.S. rate hikes may not really start to “show up” until this spring, which is why the Fed insists on a “steady” 25-basis-point hike at each future meeting.
The 10-year U.S. Treasury yield hit a four-month high of 4.091% earlier after data showed that the number of Americans filing new claims for jobless benefits fell again last week, pointing to continued strength in the labor market. Labor costs rose faster than initially expected. The yield on the 10-year U.S. Treasury note rose 6.7 basis points to 4.064% in late trading.
The two-year U.S. Treasury yield, which typically moves in tandem with interest rate expectations, was last down 0.4 basis points at 4.885% after hitting a 15-year high of 4.944% earlier.
Rhys Williams, chief strategist at Spouting Rock Asset Management, said, “Bostic has been more hawkish, so it is comforting that he supports a 25 basis point rate hike because he has been a hawk among hawks and the Fed is not Crazy, they understand that monetary policy works with a lag, so you’re only now starting to see the impact of the first hike, let alone the 400 basis points they added later.”
The Dow Jones Industrial Average rose 341.73 points, or 1.05%, to 33,003.57, the S&P 500 rose 29.96 points, or 0.76%, to 3,981.35 and the Nasdaq added 83.50 points, or 0.73%, to 11,462.98.
Fed funds futures, which are tied to the Fed’s policy rate, imply about a 50% chance of the benchmark rate target range rising to 5.5% to 5.75% by September from the current range of 4.5% to 4.75%.
At the close, Fed Governor Waller said a string of “hot” data could force the Fed to continue raising interest rates, with terminal rates likely to be higher than the 5.1%-5.4% most policymakers forecast in December.
The monthly non-farm payrolls report and consumer price data due in the next few days will give investors more clues as to how aggressive the Fed might be at the start of its March 21-22 meeting, where it is currently expected to meet. The meeting raised interest rates by 25 basis points.
The S&P 500 was just above its 200-day moving average at around 3,940, which traders see as key support, after briefly falling below it earlier in the session for the first time since Jan. 25. first time.
Salesforce surged 11.50%, its biggest one-day percentage gain since August 2020, after the cloud-based software company forecast first-quarter revenue that topped analysts’ estimates and doubled its share buybacks to $200. One hundred million U.S. dollars.
Tesla tumbled 5.85% after Chief Executive Elon Musk and his team failed to impress investors with a four-hour presentation that provided few details about its plans to launch an affordable electric car.
Macy’s jumped 11.11 percent after the department store released a full-year profit forecast that topped Wall Street expectations.
precious metal
Gold prices fell on Thursday as weekly U.S. unemployment benefits data suggested the labor market remains tight and could push the Federal Reserve to continue raising interest rates, supporting the dollar and U.S. bond yields.
Spot gold fell slightly by 0.05% on Thursday to close at $1,836.5 an ounce, having risen in the previous three trading days. U.S. gold futures fell 0.18% to $1,845.40 an ounce. In early trading in the Asian market on Friday, spot gold fluctuated within a narrow range and is currently trading around $1,837.70 an ounce.
Data earlier showed that the number of Americans filing new claims for jobless benefits fell again last week, suggesting the labor market remains strong.
Phillip Streible, chief market strategist at Blue Line Futures, said rising U.S. dollar and U.S. bond yields weighed on gold as the market has largely priced in a tight labor market.
The dollar index rose 0.5%, making gold more expensive for investors holding other currencies.
Next week’s consumer price data could give investors more clues about the Fed’s rate path. The Fed will meet on March 21-22 and is expected to raise interest rates by 25 basis points.
Fed policymakers have expressed differing views on whether recent high inflation data and a persistently overheating labor market warrant more restrictive interest rates, or whether they should patiently keep tightening policy for longer.
Oil prices rose on Thursday, buoyed by signs of a strong economic rebound in top crude importer China and easing fears of aggressive U.S. interest rate hikes.Brent crude futures settled at $84.75 a barrel, up $0.44, or 0.5%. U.S. crude futures settled at $78.16 a barrel, up $0.47, or 0.6%. In early Asian trading on Friday, U.S. crude oil fluctuated within a narrow range and is currently trading around $77.91 a barrel.
Data on Wednesday showed that Chinese manufacturing activity grew at the fastest pace in more than a decade in February, adding to evidence of an economic recovery in the world‘s second-largest economy after strict coronavirus containment measures were lifted.
China’s seaborne imports of Russian oil are set to hit record highs this month as refiners take advantage of low prices.
Comments from Atlanta Fed President Bostic eased concerns raised earlier when strong U.S. jobs data had investors concerned that faster and larger interest rate hikes could be on the way.
Growing expectations of a rate hike by the European Central Bank after consumer inflation beat expectations in France, Spain and Germany kept oil struggling to move higher.
Minutes from the ECB’s February meeting showed policymakers were divided on how to interpret inflation trends and what to signal about the next rate move.
However, U.S. crude stockpiles rose for a tenth straight week, weighing on the market. A stronger dollar also weighed on oil markets.
foreign exchange
The dollar strengthened on Thursday after earlier jobless claims data showed the U.S. job market remained strong and other data showed rising labor costs, suggesting further efforts by the Federal Reserve to raise interest rates to curb inflation.
Two-year U.S. Treasury yields, which are sensitive to interest rate expectations, hit their highest level since July 2007 amid expectations the Fed will raise rates further to curb rising consumer prices.
“The rise in U.S. bond yields that you’re seeing is not isolated,” said Alvise Marino, macro trading strategist at Credit Suisse.
“Similar developments are playing out elsewhere in the world, most notably in Europe, where inflation data has been surprisingly relatively strong,” he said.
Atlanta Fed President Raphael Bostic said on Thursday he was prepared to continue raising interest rates if inflation did not slow, as he also considered how recent higher-than-expected inflation data might affect Fed policy.
He said the economic impact of U.S. rate hikes may not really start to “show up” until this spring, which is why the Fed insisted on a “steady” rate hike of 25 basis points at each future meeting.
“Markets are increasingly concerned that new data will show that the Fed may be slightly behind schedule this year than they expected,” said Bipan Rai, head of foreign exchange strategy for North America at CIBC Capital Markets.
Futures edged higher after earlier pricing showed the market expected the federal funds rate to climb to a peak of 5.493% by September, before dipping slightly to 5.447% later in the day.
The U.S. dollar index rose 0.57% to 104.98 on Thursday, while EUR/USD fell 0.767% to $1.0596.
Market reaction to the euro zone data was initially muted. The euro rose 0.9 percent against the dollar on Wednesday, its biggest one-day gain in a month, after data showed German prices rose more than expected in February.
Investors now expect the ECB deposit rate to rise by a cumulative 100 basis points in March and May before hitting around 4.1 percent by the end of this year and early next year. Over the past month, markets have raised their forecasts for future rate hikes by 50 basis points. The ECB rate is currently at 2.5%.
Minutes from the ECB’s February meeting showed policymakers were divided on how to interpret inflation trends and what to signal about the next rate move.
Sterling closed at $1.1946 against the dollar on Thursday, down 0.66% on the day, as Bank of England Governor Bailey said “no decision has been made” on future interest rate hikes, which pushed traders to reduce bets on further interest rate hikes.
USD/JPY rose 0.42% to close at 136.76 on Thursday, hitting a new high of 137.09 in nearly two and a half months during the session. The Australian and New Zealand dollars fell 0.4% and 0.6% respectively, with AUD/USD at 0.6729 and NZD/USD at 0.6217.
market news
ECB Governing Council: 4% rate possible if inflation remains strong
European Central Bank Governing Council Wensch said that if underlying inflation pressures remain high, the market’s bet on a peak interest rate level of 4% may be correct. Wensch believes that how much borrowing costs will increase depends on the situation of core inflation. “If we can’t get a clearer signal that inflation is falling, we will have to take more action. This means that the possibility of 4% interest rate level cannot be ruled out.” nature.” Wensch insisted that he would not make any judgments on terminal interest rates until he saw progress in core inflation.
Fed Waller: If the data continues to be hot, the policy rate should rise above 5.1%-5.4%
① Federal Reserve Governor Christopher Waller said on Thursday that a string of “hot” data could force the U.S. central bank to raise interest rates to 5.1%-5.4%, higher than the range most Fed policymakers predicted in December
② Waller said that recent economic data showing an “excessively” strong labor market, strong consumer demand and persistent price pressures called into question the extent of the U.S. central bank’s progress in fighting inflation.
③ If reports in the coming weeks show that hiring has slowed and inflation resumes falling after an unexpected acceleration in January, Waller said, “I would be in favor of raising the target range for the federal funds rate a few more times, with the final rate expected to be around 5.1.” to 5.4%”.
④ But he added, “If these data reports continue to overheat, the policy target range for this year will have to be raised further to ensure we don’t lose the momentum we had before the data release.”
Fed’s Bostic: Firmly in the 25-basis-point camp
① Atlanta Fed President Bostic said on Thursday that given high inflation and a strong job market, the Fed may have to do more until it meets on the right path for policy. Already seeing “some weakening” in inflation, but the Fed needs to remain “resolved” in fighting it.
② Bostic said the impact of U.S. interest rate hikes on the economy may not start to really “have an impact” until this spring, which is why the Fed is currently sticking to a “steady” rate hike of 25 basis points. There is an ongoing debate about how much impact monetary policy has on the current economy. Caution is appropriate given the roughly balanced risks now, so the Fed does do enough to keep inflation under control, but not “doing more than we need to.”
The number of U.S. jobless claims continued to fall last week, and labor costs were revised up sharply in the fourth quarter
①The number of Americans filing new claims for unemployment benefits fell again last week, suggesting the labor market remains strong and fueling financial market concerns that the Federal Reserve may continue to raise interest rates for a longer period of time.
② A separate report from the Labor Department on Thursday showed that labor costs climbed much faster in the fourth quarter than previously estimated, further adding to those concerns. While recession risks are rising, the labor market remains tight, which will keep inflationary pressures on the back of solid wage growth.
③ Christopher Rupkey, chief economist at FWDBONDS, said: “Despite the news of layoffs by big technology companies in the past few months, the labor market has shown no new signs of deterioration, and overall layoffs are minimal. Determination of economic needs.”
④ The Labor Department said initial jobless claims fell by 2,000 to a seasonally adjusted 190,000 in the week ended February 25. It was the seventh straight week that initial jobless claims remained below 200,000. Economists had forecast 195,000 initial jobless claims last week. Unadjusted claims fell by 9,297 to 201,710 last week.