Financial Breakfast on February 8: Powell’s speech eased interest rate hike concerns, the dollar fell from a one-month high
On Wednesday, February 8, the dollar retreated from a one-month high on Tuesday after Federal Reserve Chairman Powell reiterated last week’s statement that inflation had begun to slow, saying he expected inflation to fall sharply this year; gold rose slightly as investors digested the Fed’s Chairman Powell’s speech on the outlook for interest rate hike policy; Oil prices climbed more than 3% after Federal Reserve Chairman Powell eased market concerns about interest rate hikes, while recovering Chinese demand also boosted oil prices.
Commodity closing situation:The settlement price of Brent crude oil futures rose 3.3% to $83.69 a barrel, and the settlement price of U.S. crude oil futures rose 4.1% to $77.14 a barrel; U.S. gold futures closed up 0.3% to a settlement price of $1884.80.
U.S. stocks closed:The Dow Jones index closed up 0.78% at 34156.85 points; the S&P 500 index closed up 1.29% at 4163.91 points; the Nasdaq composite index closed up 1.90% at 12113.79 points.
wednesday preview
precious metal
Gold prices struggled to rise on Tuesday, with the dollar edging back slightly as investors digested comments from Federal Reserve Chairman Jerome Powell on the outlook for interest rate hikes. Spot gold rose 0.2% to $1,870.49 an ounce.
Powell said on Tuesday that the latest U.S. jobs report showed that the process of pushing inflation back around the Fed’s 2 percent target would take “substantial time,” noting the need to raise interest rates further. After Powell’s speech, the dollar index fell from a one-month high, pushing gold prices to jump as much as 0.8%.
Minneapolis Federal Reserve Bank Chairman Kashkari said earlier that the Fed will likely have to raise interest rates to at least 5.4 percent to curb high inflation. Analysts at Commerzbank predict gold will hit $1,850 by mid-year and $1,950 by the end of the year.
Spot silver fell 0.5% to $22.16 an ounce, platinum fell 0.1% to $971.05 and palladium jumped 3.1% to $1,647.87.
Oil prices climbed more than 3% on Tuesday after Federal Reserve Chairman Jerome Powell eased concerns over rate hikes, while recovering Chinese demand also boosted prices. Federal Reserve Chairman Jerome Powell said on Tuesday that very strong employment data released last week confirmed that the central bank still has some way to go in raising interest rates.While declining to comment on whether knowing the data so strong would have swayed last week’s decision to raise rates by 25 basis points, Powell told the Economic Club of Washington that when it comes to tightening monetary policy, the data “suggests why this is going to be a long way off.” the course of time”. The dollar index fell, pushing oil prices higher.
Forecasts of stronger Chinese demand also boosted crude oil prices on Tuesday. The head of the International Energy Agency (IEA) said on Sunday that the agency expects China to account for half of the growth in global oil demand this year, adding that demand for jet fuel is surging.
Saudi Arabia, the world’s top oil exporter, raised the price of its flagship crude product for buyers in Asia for the first time in six months in anticipation of a recovery in demand, especially from China.
“It seems to be sending a message that China is reopening, and if the Saudis aren’t afraid to raise oil prices, then that means demand is pretty good,” said Phil Flynn, an analyst at Price Futures Group. The export terminal, which handles 1 million barrels of oil, ceased operations after a major earthquake in the region.
foreign exchange
The dollar retreated from a one-month high on Tuesday after Federal Reserve Chairman Jerome Powell reiterated last week’s statement that inflation had begun to slow, saying he expected it to fall sharply this year.
Powell did not return to his hawkish stance, despite Friday’s strong U.S. non-farm payrolls report, which convinced investors that the Fed was unlikely to tighten policy further than the market had already priced in. The greenback fell across the board, with the biggest losses against the Japanese yen, Swiss franc and Australian and New Zealand dollars.
During a question-and-answer session at the Economic Club of Washington, Powell did say that returning to the 2% inflation target would be a bumpy process that would require further rate hikes. Powell, however, declined to equate the surprising strength of the labor market in the jobs report with expectations that interest rates would need to rise higher than Fed policymakers forecast late last year.
Friday’s U.S. jobs report surprised traders who were banking on an imminent pause in the Federal Reserve’s rate hike cycle and sent the dollar higher. Comerica Bank chief economist Bill Adams wrote in a research note after Powell’s speech, “Powell had the opportunity to signal a shift to a more aggressive stance, but he did not. In the short term, the Fed may continue to raise interest rates once (perhaps twice. ), and then stand still.”
U.S. interest rate futures showed expectations for the federal funds rate to peak at just over 5.1% in June, compared with expectations for a peak below 5% ahead of Friday’s jobs report. In afternoon trade, the euro was little changed at $1.0719, having hit a five-week low of $1.0670 earlier.
The dollar fell 1.2% against the yen to 131.07. It hit a one-month high on Monday. The yen took a hit after the Nikkei reported that the Japanese government had invited Bank of Japan Deputy Governor Masaka Amamiya to succeed Haruhiko Kuroda as governor. Compared with other contenders, Amamiya is considered more dovish.
Sterling traded at $1.2035, up 0.1%, having hit a one-month low of $1.1974 in the previous session. Investors are awaiting further comments from BoE officials this week after last week’s meeting was seen as dovish. The Australian dollar rose 0.9 percent to $0.6943, having earlier surged as much as 1 percent after the Reserve Bank of Australia announced it would raise the cash rate by 25 basis points and said further hikes were needed, a policy tilt that was more hawkish than many expected.
market news
Powell reiterated that the task of fighting inflation is arduous, highlighting the importance of next week’s CPI report
Federal Reserve Chairman Powell reiterated that getting inflation back to 2% is a huge challenge for the Fed. For the U.S. Treasury market, this will only underscore the importance of next Tuesday’s CPI report, meaning there is limited room for further declines in yields. Swap rates tied to the Fed’s June and July meetings remained near the policy peak forecast of 5.13%.
Norway sets price cap on Russian oil products
On February 7, local time, the Ministry of Foreign Affairs of Norway announced that Norway has set a price cap on petroleum products from Russia. capped at $45 per barrel. This corresponds to the ceiling price adopted by the European Union.
WHO: Up to 23 million people may have been affected by Turkey-Syria earthquake
On the 7th local time, the World Health Organization stated that as many as 23 million people may have been affected by the strong earthquake in Turkey and Syria on the 6th, including about 5 million impoverished people. The World Health Organization said the quake caused severe damage to infrastructure, especially health facilities, in southeastern Turkey and northwestern Syria. The agency is cooperating with international partners to provide emergency and medium- and long-term assistance to Turkey and Syria, and to support disaster relief and post-disaster reconstruction.
The Ukrainian government reappointed the heads of military administrations in several places
Ukrainian media said that the Ukrainian government on the 7th appointed new heads of the Military and Political Administration of the three regions of Dnepropetrovsk, Zaporozhye and Kherson. On January 24, the Ukrainian government approved the resignation applications of the heads of the five military administrations in Dnepropetrovsk, Zaporizhia, Kyiv, Sumy, and Kherson.
Russia-Uzbekistan conflict drags down European economy, EU approves a series of economic aid plans
On the 7th local time, the European Commission issued a statement saying that the conflict between Russia and Ukraine continued, energy costs were high, and the EU economy was severely disrupted. Under the State Aid Interim Crisis Framework, the European Commission approved a €100 million aid package for Slovenia to subsidize companies that lay off workers or reduce working hours due to rising energy bills. The plan aims to maintain employment levels in Slovenia and avoid layoffs; the European Commission approved Sweden’s plan to reduce electricity consumption in the context of the Russia-Ukraine conflict, which will introduce financial measures to support energy consumption reduction targets; in addition, the Commission approved a Finnish guarantee aid program worth 15 million euros to support power companies in the Åland region normal operation.
Henan issued consumption coupons according to the standard of no more than 500 yuan per person
The Henan Provincial Federation of Trade Unions issued the “Notice on Doing a Good Job of Vigorously Boosting Market Confidence, Promoting Economic Stability, and Helping Release Consumption Potential”. Issue coupons.
British Prime Minister Sunak undergoes minor cabinet reshuffle
According to a British Sky TV report, on February 7 local time, British Prime Minister Sunak carried out a small-scale cabinet reshuffle and split and reorganized some government departments. It is reported that the reorganization involves the change of 5 positions. Downing Street said the reshuffle was to ensure a focus on halving inflation, growing the economy and reducing debt, among other things.
IATA: It is expected that the flight capacity in the Asia-Pacific region will recover faster than expected this year
IATA predicts that flight capacity in the Asia-Pacific region will recover faster than expected this year. The global aviation industry is expected to achieve revenue of US$779 billion this year and net profit of US$4.7 billion, making it the first profit since 2019. Among them, passenger transportation will become an important driving force for the global aviation industry to achieve profitability this year. Global passenger transportation demand is expected to return to 85.5% of the pre-epidemic level, and passenger transportation revenue is expected to reach 522 billion US dollars.
