Written by Jimmy McGiv
Orlando, Florida (Reuters) -Today
Understand the forces that lead global markets
Written by Jimmy McGiv, a column writer on the market
Wall Street took a break on Thursday, but not before the other Whocy S&P 500 and NASDAQ raised higher levels, while dollar and bond returns did not change much as investors have reduced jobs before US job data on Friday.
More about all of that below. In my pillar today, I analyze the press conference of Fed Jerome Powell, and the message that appeared loudly and clearly – as long as the unemployment rate remains low, it will be very difficult to justify the price cuts.
If you have more time to read, here are some of the articles I recommend to help you understand what happened in the market today.
1.
Main market movements today
* FX: The dollar gains for the sixth day, an increase of 2.5 % this week. HitsFour-MONH High VS Yen above 150.00 yen. * Stocks: S&P 500 and NASDAQ have reached new levels, but they end with 6.4 % and flat, respectively. DOW decreases 0.7 %, Russell 2000 loses 0.9 %. * Stocks/sectors: Microsoft +5 % shares, meta +11 %, techsector +2 %. Apple +3 % and Amazon -4 % in post -hours trade. * Bonds: Treasury revenues do not change slightly, after they were 5 inches today. * Commodities: Comex Copper 22 % is disrupted after Trumpxpimps release refined copper from a 50 % tariff. Premium on LMECOPPER, about 3000 dollars earlier this month, almost disappears.
What stops technological tyrant?
It is easy to forget in the midst of the bullish frenzy, but the mutations of asset prices do not end, either over time, or suddenly and painful. The stimulant predicting can be difficult, and get a correct timing similar to the lottery.
Currently, the gathering in major technology in the United States appears to be uncomfortable. Inflation, renewable nutrition squad, increased bond returns, customs tariffs, excessive Amnesty International? They were all thrown in this sector, but it was running forward, as they raised the S&P 500 and NASDAQ index for a high record after the record in recent weeks.
Meta and Microsoft raised the heavy on Thursday, as Microsoft joined NVIDIA in the rare air of Cap Market, which is 4 trillion dollars. Meta and Microsoft’s profit reports after Wednesday hours show that their bets on artificial intelligence pay their fruits.
The image of the global stocks was more depressed, as Powell Falcons’ signals and American inflation data on Thursday pushed most of the main indicators to red.
On the total front, the annual inflation of the United States of America PCE 2.8 %, and the average PCE rate in Dallas Fed increased to 3.4 %, which is the highest since February last year.
There are signs that the effect of customs tariffs on goods starts. Ernie Tedeschi at the YALE Budget Laboratory published on X that PCE Prices rose 1.7 % this year. Except for the epidemic, this is the largest increase for six months since 1987.
In the customs tariff, US president Donald Trump gave Mesico on Thursday to postpone a period of 90 days to negotiate a broader commercial deal, but it is expected to slap the deadline of countries that did not deal with commercial deals by 12:01 am ES (0401 GMT).
As the economist Phil Suttle, the so -called “Brexes” countries stood in front of Trump more than the advanced economies, which “generally preferred to prosecute peace.” But they pay a price – as things stand, China and Brazil face a tariff of up to 50 %; South Africa 30 %; India is 25 %.
“This is a state of a world that turned upside down, and does not improve the global view,” said Suttle.
The focus now turns into US recruitment data on July on Friday. The growth of strong jobs, and most importantly, the low unemployment rate can outperform all bets in reducing the September rate. Currently, the market pricing shows that the September pieces are basically a currency toss.
Have we seen the last rate to reduce the Powell rate as the head of nutrition?
Federal Reserve Chairman Jerome Powell explained on Wednesday that the flexible American labor market is currently the primary determinant of monetary policy, a sign that strong employment numbers in July can outperform all bets to reduce the interest rate in September and reduce the possibility of any other mitigation this year.
At his press conference, following the Federal Open Market Committee meeting on Wednesday, Powell insisted that the next step that the authority has put in prices will depend on the “total” economic data received. He admitted the case to alleviate, such as softening in consumer spending, gross domestic product growth by only 1.2 % in the first half of the year, and negative risks to the labor market to weaken the demand for employment and supply.
But he pointed to the reason for maintaining the Federal Reserve, its restricted position in a moderate manner: “The main number you should see now is the unemployment rate.”
This fixed position is especially noticeable given that conservative Christopher, Wald, Michelle Bowman voted to reduce it, which is the first time in more than 30 years in the presence of two publications at the Federal Reserve Policy meeting.
But Powell has a point. The labor market is still widely balanced, thanks to the most strict immigration controls, which determines the flow of foreigners to the workforce. Other indicators such as functional installations and opening rates stand very well. In addition, the unemployment rate of only 4.1 % is hardly justified to reduce the rate.
The reaction of the first market – declined in Wall Street, the rise in bond returns, the rise in dollars and the increase in cooling of the cuts cut in the financial markets – indicates that investors heard a loud and clear Powell message.
Future price markets now indicate that the possibility of reducing a quarter of a point in September is mainly a coin, and its lowest prices in more than a year. Only one rate by the end of this year is a full price.
“It is difficult to argue with the interpretation of the market based on Powell’s tone.
“Powell is completely clear that he is linking himself to the unemployment rate,” Engeland notes.
Unstable full employment
The flexibility of the labor market shows the reason for the exaggeration in the estimation of the financial markets again, the appetite of the Federal Reserve to alleviate.
The unemployment rate was established at 4.0-4.2 % for more than a year. This is historically low, and as Powell says, it indicates mainly that the economy is working in full work. As long as this is still the case, it will be difficult to justify the cut rates, even if this balance is increasingly fraught with “dual slowdown” to display employment and demand, says Mike Reid from RBC.
We must not ignore inflation, which can be said to call for the modest “humble” Powell position. The annual inflation is “somewhat higher” than the Federal Reserve’s goal by 2 %, according to Powell, where Core CPI is 2.9 % and Core PCE by 2.8 %.
And with the passage of definitions that are not fully felt, the risks of prices are perverted to the upward trend. Powell believes that the definitions should represent a high price for one time, but it admits that no one can be sure. If the crawling of the emerging customs tariffs continues in the prices of goods, the Federal Reserve may feel that it must wait to reduce the policy until the impact calms down. Perhaps it will not be until next year.
At the height of the disturbances after the endurance day in early April, traders heard in more than 130 basis points of mitigation this year. Just one month ago, they expected about 70 basis points of discounts by the end of the year, but this now has decreased to about 35 basis points.
If we look further than that, only 65 basis points of mitigation in the future contract curve are priced by May of next year when Powell’s duration as the Federal Reserve Carre ends. Was Powell to head what reduces his last price as head of federal reserve lectures? This is unlikely, but it is definitely not impossible.
What can the markets move tomorrow?
* Retail sales in Australia (July) * PMI PMI in Japan (July) * China PMI PMI (July) * UK manufacture
Do you want to have a trading day in your inbox every morning? Subscribe to my news message here.
The views expressed are the views of the author. It does not reflect the opinions of Reuters news, which, according to the principles of confidence, is committed to integrity, independence and liberation from bias.
(Written by Jimmy McGiv; Edit Nia Williams)
