Markets projected a less aggressive Federal Reserve coming future in a nearly identical reaction to lackluster CPI numbers the previous day.
This idea was yet again refuted, this once by Mary Daly, president of the San Francisco Federal Reserve Bank, in a discussion with Bloomberg after the New York closing last week.
She stated that her baseline model for the Federal Open Market Committee (FOMC) meeting next month is a rate increase of 50 basis points. She stated that she would be up for a 75 basis point raise and did not exclude the possibility of that happening.
Although praising the most recent CPI and PPI figures, she emphasized that the Federal Reserve will take a variety of variables into account when making its assessment. A few encouraging data signs will not be sufficient to persuade the board that inflation has been defeated.
By the end of 2022, Daly expects the Fed funds rate to be 3.4%. In the next month, there will be another FOMC meeting. In the next several weeks leading up to that, there will be an additional batch of inflation statistics, jobs data, a multitude of other economic data, and the yearly Wyoming conference. The event frequently serves as the setting for announcing the general direction of policy for 2023.
APAC generally adopted Wall Street’s example as the major indices on Wall Street ended their cash sessions somewhat unchanged.
The Nikkei 225 of Japan was the outlier, rising by more than 2.5%. They have emerged from their vacation from Thursday, and this rise seems to be a rebound. Following an OPEC report stated that they expect a supply surplus into Q3, crude oil prices decreased during the Asian session. Though Brent is close to $99 barrel, the closest WTI futures contract to maturity is below $94 barrel.
The New Zealand Dollar has outperformed all other currencies so far on Friday, building on advances from Thursday in anticipation of this Wednesday’s RBNZ meeting on monetary policy. There will be a 50 basis point rate increase, according to the market. At $1791/oz, gold prices are stable.
The US will receive additional jobs data and the publication of the consumer sentiment index by the University of Michigan following the UK GDP and industrial output figures.