The US stock market fell on the 16th. The closely watched US producer price index (PPI) for January followed the consumer price index (CPI) to post a faster-than-expected rise, adding to the view that the US Federal Reserve is in no rush to cut interest rates.
Stock closing price change from previous business day S&P 500 stock index 5005.57-24.16-0.48% Dow Jones Industrial Average 38627.99-145.13-0.37% Nasdaq Composite Index 15775.65-130.52-0.82%
The PPI statistics highlighted continued inflationary pressures, driven by a sharp increase in the prices of services. As the US monetary authorities grappled with the “last mile” to meet their targets, there was little buying interest in the market as a whole.
US PPI, composite and core beat expectations in January – inflation continues (2)
“It’s been a wild week,” said Chris Zaccarelli, chief investment officer at the Independent Advisors Alliance (IAA). “While it is understandable that the market would have a knee-jerk reaction when the data is significantly up or down, either this pattern continues and a new trend is established, or it is just an anomaly is this week’s data. “We’ll have to wait for a few more rounds of data to see for sure.”
“The path to slowing inflation is far from perfect,” said Peter Boockvar, author of the Book Report.%, and I’m beginning to think there is no other option.”
Federal Reserve Chairman Jerome Powell and others have indicated that they will carefully assess whether to ease policy. Two district Federal Reserve presidents, who have voting rights at this year’s Federal Open Market Committee (FOMC) meeting, said today they are open to cutting interest rates three times this year if inflation continues to rise.
San Francisco Federal Reserve President Daley said the expectation of three interest rate cuts this year was a “reasonable baseline.” Atlanta Fed President Bostic said it is “certainly possible” the Fed could cut interest rates three times, rather than the two it currently prefers, if inflation data improves.
Meanwhile, former Treasury Secretary Summers said the continued inflationary pressure evident in the latest data suggests the Fed’s next move could be to raise rates rather than cut them.
Despite the possibility that high interest rates could last longer than expected, US stocks fell only slightly on a weekly basis.
Investors chose to ride the bullish momentum and focus on strong financial results and optimism around artificial intelligence (AI), said Fawad Razakzada, market analyst at City Index.
“However, the Magnificent Seven, which includes seven major technology stocks, have reached extremely expensive levels, and there is always a smoldering risk of a near-term correction,” Razakzada said. “NVIDIA is set to report final group results in the next week. Much of the optimism has already been priced into the stock price, so it wouldn’t be too surprising to see some correction in the tech sector .”
national debt
US bond yields are rising. Expectations for a US interest rate cut by the end of the year faded in response to the upward trend in PPI statistics released this morning, and yields rose to their highest level since the start of the year . However, the rate of progress has slowed since then.
Latest government bond price change rate (bp) US 30-year bond yield 4.44% 2.90.66% US 10-year bond yield 4.28% 5.31.26% US 2-year bond yield 4.64% 7.01.52% 16:00 ET 48 minutes
US Treasury yields rose this week to their highest level this year after CPI data showed stronger-than-expected growth. Yields at maturity, which are most sensitive to changes in the outlook for monetary policy, rose even higher on the day. The two-year bond yield temporarily rose 14 basis points (bp, 1bp = 0.01%) to 4.72%. Five-year bond yields have also hit new highs since the start of the year, while long-term bond yields are below new annual highs.
The probability of an interest rate cut in June, as reflected in interest rate swaps linked to the FOMC, has fallen from nearly 100% to around 88%. The expected rate cut by the end of this year has been reduced to around 85 basis points. This is in line with the US Monetary Authority’s forecast of 75 basis points in December last year.
“The market needs to consider how much of a cut in US interest rates is appropriate,” said Stephen Lickito, economist at Mizuho Securities USA, on Bloomberg Television. “The question is whether there will be three or fewer rate cuts (within this year), not whether there will be more than three,” he said.
Yields have been pushed back from their initial highs because “when yields rise, institutional investors buy back,” said Thomas Di Galloma, co-head of interest rate trading at BTIG. The 10-year yield’s 100-day moving average of 4.33% is also in the “opportunity to buy zone.”
money order
In the foreign exchange market, the dollar index rose slightly. The upward trend in PPI statistics and the rise in government bond yields provided an advantage. On a weekly basis, prices rose for seven consecutive weeks, marking the longest consecutive peak since September last year.
At one time, the yen was sold for 150 yen and 65 sen to the dollar. This is the seventh consecutive weekly decline, and the first long-term decline since October 2022. However, there is a sense of caution about intervention by the Japanese monetary authorities, and the Yen has not weakened to the level of 151.91 yen and is’ the dollar has strengthened to the level reached in 2023.
Exchange Rate Last Business Day Bloomberg Dollar Index Change Rate 1244.080.200.02% USD/JPY ¥150.20 ¥0.270.18% EUR/USD $1.0776 $0.00040.04% 16:58 ET
Scotiabank’s Sean Osborne said that US economic data released today “suggests that US Treasury yields will remain high for some time, supporting the underlying trend of the dollar.” “We still believe that the dollar in general is slightly overvalued. As a result, the dollar will continue to develop steadily, but it does not necessarily mean that the dollar will move significantly higher.”
raw
The New York crude oil market continued to rise, closing at the highest price since the beginning of the year. Although expectations for interest rate cuts have receded in response to the PPI, rising tensions in the Middle East were seen as a factor in the oil market.
West Texas Intermediate (WTI) futures closed above $79 a barrel. Nasrallah, the leader of Hezbollah, a pro-Iranian militia in Lebanon, has vowed to intensify the war against Israel. Risks have increased in the region, which accounts for around a third of the world’s crude oil production.
Hezbollah leader says he will escalate war against Israel
“Oil prices rose significantly last week, but this week has been quite volatile. The strong dollar is holding us back,” said Fawad Razaqzada, market analyst at City Index, in a client report. “On the whole, it is considered that risks associated with the crude oil market are tilted to the side, as there are not many factors that could have a negative effect on prices,” he wrote.
WTI futures for March on the New York Mercantile Exchange (NYMEX) closed at $79.19 a barrel, up $1.16 (1.5%) from the previous day. North Sea Brent April contracts on London’s ICE rose 61 cents to $83.47.
Money
Gold futures prices continue to rise. However, on a weekly basis, this is the second consecutive week of decline. US economic data showed that inflation is persistent, raising expectations that the monetary authorities will be in no rush to cut interest rates.
Spot gold prices fell below $2,000 an ounce earlier this week on expectations that high interest rates will continue for an extended period of time. After that, on the 15th, there was a rebound in response to a sharp decline in retail sales statistics. On the 16th, after the PPI was published, the price briefly fell below $2,000, but then started to rise again.
Ole Hansen, head of product strategy at Saxo Bank, said until the first rate cut happens, gold’s near-term direction will depend on “coming economic data and what that means for the dollar, yields and especially expectations for rate cuts. depending on the impact.”
He also said the gold market is seeing “a conflict between short-term momentum selling and continued physical demand from central banks and retail investors.”
As of 2:49 pm New York time, the spot gold price was $7.55 (0.4%) higher than the previous day at $2,011.95 an ounce. It is down 0.6% for the week. New York Mercantile Exchange (COMEX) gold futures for the April contract rose $9.20, or 0.5%, to close at $2,024.10. It was down 0.7% for the week.
He said: Wall Street Ends Wild Week on Sour Note After PPI: Markets Wrap
Treasury Yields Hit Year-To-Date Highs As Rate Cut Hopes Differ
Dollar Heads for Seventh Weekly Win; Lags Franc: Inside G-10
Oil Rises to 2024 Highs as Middle East Tensions Rise
Gold Set for Second Weekly Loss as US Data Shows Sticky Inflation （抜粋）
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