Home Economy News Marketmind: How to be hawkish by J.Powell

Marketmind: How to be hawkish by J.Powell

by

Marketmind: How to be hawkish by J.Powell By Reuters

Breaking News

‘;

Economy 2 minutes ago (Nov 29, 2022 11:17PM ET)

(C) Reuters. FILE PHOTO: Federal Reserve Board Chairman Jerome Powell holds a news conference after Powell announced the Fed raised interest rates by three-quarters of a percentage point as part of their continuing efforts to combat inflation, following the Federal Op

By Wayne Cole

SYDNEY (Reuters) – A look at the day ahead in European and global markets from Wayne Cole.

So Tuesday’s bout of post-pandemic euphoria in Chinese markets has cooled today, perhaps a recognition of just how long it will likely take to materially raise vaccination rates there.

Even when restrictions ease, it will mean more infections and illness which could hamper growth over the first half of next year. Disappointing Chinese PMI surveys for November just underline the damage already done.

But neither have markets given back yesterday’s gains, so there’s clearly an expectation Beijing is now set on opening up which has to be positive for the global economy and supply chains over time.

Which leaves investors waiting on Powell, again. The analyst view is that he will have to play Grinch to stop U.S. markets from further easing financial conditions. Since the Fed hiked by 75 basis points on Nov. 2, 10-year yields have fallen 38 basis points and undone much of that good work.

So the message will likely be: “Hold your horses on rate cuts people.” The labour market is drum tight and inflation of 7.7% is not 2%. The terminal rate will have to be higher than first thought to be sufficiently restrictive and stay there for longer.

Whether he can be hawkish enough is another matter given the signs of a turning point in inflation are mounting. Here in Australia today, a new monthly measure of inflation rose just 0.2% in October when some analysts had looked for a jump of 1.0%. The annual pace slowed to 6.9%, from 7.3%, and suggests a peak is nearby.

That echoes the inflation data from Germany and Spain which both surprised on the downside and saw markets take 10bps off pricing for ECB rates at the December policy meeting. That suggests today’s EU-wide inflation figure will undershoot the forecast of 10.4%, even if the core measures prove stickier.

Key developments that could influence markets on Wednesday:

Federal Reserve Chair Jerome Powell speaks on the economic outlook and the labour market before a hybrid Brookings Institution event at 1830 GMT, including a q&a.

A horde of U.S. data including JOLTS job openings, ADP employment, Chicago PMI and the second estimate of Q3 GDP and PCE prices.

Marketmind: How to be hawkish by J.Powell

Japan’s Oct factory output falls again on global slowdown, weak chip demandBy Reuters – Nov 29, 2022

By Kantaro Komiya and Kaori Kaneko TOKYO (Reuters) – Japan’s factory output fell for a second consecutive month in October, as stalling global demand and lingering supply…

Asia stocks choppy as investors cautious after disappointing China dataBy Reuters – Nov 29, 2022

By Kane Wu HONG KONG (Reuters) – Asian shares wobbled on Wednesday as investors remain cautious about China’s path to reopening its economy after it released disappointing…

Dollar near one-week high as traders prepare for Powell, payrolls testsBy Reuters – Nov 29, 2022

By Kevin Buckland TOKYO (Reuters) – The U.S. dollar stuck close to a one-week high on Wednesday, holding on to gains from a three-day rally, as investors braced for comments from…

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News