01/10/2024 Evening Reports
The U.S. dollar rose on Tuesday as Federal Reserve Chair Jerome Powell pushed back against expectations for additional large interest rate cuts, signaling a more cautious approach. Powell, speaking at a conference in Tennessee, indicated the Fed is likely to continue with quarter-point rate cuts, saying, “This is not a committee that feels like it is in a hurry to cut rates quickly.”
Traders adjusted expectations for the Fed’s November policy meeting, with bets on a 50 basis-point rate cut dropping to 35.4% from 53.3%, according to CME Group’s FedWatch Tool. Meanwhile, the yen steadied, the Australian dollar edged higher after upbeat retail sales data, and the euro faced a third consecutive loss amid increasing chances of a rate cut this month.
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Global Bond Rally Accelerates as Euro-Area Inflation Eases, US Markets Steady
Global bonds surged Tuesday as data showing euro-area inflation dropped below the ECB’s 2% target boosted expectations for interest rate cuts.
Yields on 10-year German bonds fell to their lowest since January, while US Treasuries advanced.
Meanwhile, S&P 500 futures were steady after Monday’s record high.
Optimism surrounding the Federal Reserve’s ability to achieve a “soft landing” for the economy helped propel both stock and bond markets in Q3, though some, like BlackRock’s CEO Larry Fink, warned against overestimating the extent of future rate cuts.
Oil prices fell amid the prospect of increased Libyan supply, and in US premarket trading, ZIM Integrated Shipping shares dropped due to a dockworkers’ strike on the US coasts.
Conversely, FedEx and UPS gained on potential benefits from the disruptions.
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