The US Commerce Department reported Thursday that the US economy grew at an annualized rate of 2.7% in the latest quarter. That's down from the previous estimate of 2.9% growth. Slower growth in Gross Domestic Product, a broad measure of economic activity, may be a sign that a series of sharp interest rate hikes by the Federal Reserve has a greater impact than previously thought. This has eased investor fears about the Fed's aggressive willingness to raise rates further. As the stock market closed yesterday, the Dow Jones Index (US30) increased by 0.33%, and the S&P 500 Index (US500) added 0.53%. Technology Index NASDAQ (US100) gained 0.72%.
According to data released by the Labor Department, the number of initial jobless claims fell to 192,000 last week. This is down 3,000 from the previous week's revised upward total of 195,000. Despite many layoffs in some sectors, the US labor market remains robust, with nearly two jobs available per job seeker. The strong labor market will keep the Fed on track to raise rates at the March meeting. But economists expect jobless claims to rise as the economy slows and eventually enters a mild recession later this year.
Today, investors' attention will be on the US Personal Consumption Expenditures Price Index (PCE) for January, the Fed's preferred measure of inflation. The index is expected to rise 0.4% month-over-month, which may reinforce the Fed's hawkish bias.
Equity markets in Europe were mostly up yesterday. Germany's DAX (DE30) gained 0.49%, France's CAC 40 (FR 40) added 0.25%, Spain's IBEX 35 (ES35) jumped by 0.63%, Britain's FTSE 100 (UK100) closed down by 0.29%.
The ECB's own financial performance suffered from a paradigm shift in monetary policy in 2022. According to the ECB's financial report for 2022, the ECB had to use 1.6 billion euros from risk reserves created in the past to avoid losses. The ECB's actual losses are due to unrealized price losses on securities held in its own funds and portfolios in US dollars due to rising bond yields. In other words, the sharp increase in bond yields amid a broader paradigm shift against inflation has forced the ECB to write off its own bonds. Some national central banks will be less fortunate and are likely to suffer losses. In recent weeks, some national bank governors have already hinted at potential losses.
The US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) are up by 7.6 million barrels from the previous week. The US crude oil inventories stand at 479.0 million barrels, about 9% above the five-year average for this time of year. Fears of a further slowdown in demand for crude oil put pressure on oil prices this week amid a flurry of hawkish signals and economic data. But oil prices rose slightly on Friday, as the prospect of larger-than-expected supply cuts from Russia largely offset fears that rising interest rates would dampen demand this year.
Asian markets mostly fell yesterday. Japan's Nikkei 225 (JP225) decreased by 1.34%, China's FTSE China A50 (CHA50) lost 0.11% yesterday, Hong Kong's Hang Seng (HK50) ended the day down by 0.35%, India's NIFTY 50 (IND50) fell by 0.25%, and Australia's S&P/ASX 200 (AU200) ended the day 0.40% negative.
Incoming new BOJ Governor Ueda warned on Friday that uncertainty about Japan's economic recovery remains "very high," requiring the Bank of Japan to maintain the ultra-soft monetary policy. His neutral comments, contrary to hawkish market expectations and rising government bond yields, suggest the yen could start to decline again. Core consumer inflation in Japan reached a new 41-year high. According to the latest figures released on Friday, inflation reached 4.2%. Such readings will once again put pressure on the central bank to phase out its massive stimulus program. According to the latest poll, two-thirds of analysts expect Japan's central bank to begin tapering its ultra-soft policy in either April or June. However, a majority said Japan's negative interest rate policy is likely to remain in place until the second half of 2024.
S&P 500 (F) (US500) 4,012.32 +21.27 (+0.53%)
Dow Jones (US30)33,153.91 +108.82 (+0.33%)
DAX (DE40) 15,475.69 +75.80 (+0.49%)
FTSE 100 (UK100) 7,907.72 −22.91 (−0.29%)
USD Index 104.60 +0.01 (+0.01%)
- – Japan National Core CPI (m/m) at 01:30 (GMT+2);
- – German GDP (q/q) at 09:00 (GMT+2);
- – Switzerland Employment Rate (m/m) at 09:30 (GMT+2);
- – French GDP (q/q) at 09:45 (GMT+2);
- – US PCE price index (m/m) at 15:30 (GMT+2);
- – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2);
- – US New Home Sales (m/m) at 17:00 (GMT+2);
- – US FOMC Member Mester Speaks at 17:15 (GMT+2).
by , 2023.02.24
We advise you to get acquainted with the daily forecasts for the major currency pairs.This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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