Bond yields rise
US 10-year bond yields rose 14 basis points to 4.16%, and two-year bond yields approached 4.5%.
Fed hints have almost eliminated the chances of a rate move in March, and the chances of a rate cut in May have diminished. The dollar recorded its strongest levels since November.
For its part, the S&P 500 index fell from a record high, but it was far from its lowest levels in the session, after Nvidia led gains in chip makers.
Traders tried to digest the statements of Federal Reserve spokesmen, as Powell reiterated that policymakers are likely to wait until after March to cut interest rates, in an interview conducted on Thursday with the “60 Minutes” program on the “CBS” network, which was broadcast. Broadcast on Sunday evening.
For his part, Minneapolis Federal Reserve Bank President Neel Kashkari said that officials have time to measure the incoming data before easing, while his counterpart in Chicago, Austin Goolsbee, reiterated that he would like to see more positive inflation data.
For Macquarie’s Terry Weissman, the market’s shift in its assessment of when the Fed will start cutting interest rates rings true.
“We always thought June was the most likely month for a cut given the Fed’s dovishness,” Weissman noted. He added: “But what concerns us is whether the continued strength of the US labor market in January means that the consumer will remain strong, thus reversing the deflationary trend and expanding tight monetary policy indefinitely.”
The ISM’s overall services index rose to 53.4 points last month. The index has remained above the 50-point level, which indicates expansion, for a year. The latest reading also exceeded all estimates in a Bloomberg survey of economists, and the group’s measure of prices paid for materials jumped, indicating that costs are rising at a faster pace.
Jeffrey Roach of LPL Financial says the spike in prices paid mostly reflects an increase in shipping costs. He added that investors should expect lower prices if conditions in the Red Sea improve.
2024-02-05 22:42:09
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