The day in the US session had little to go on. Not only was it Monday, but the economic calendar was void of any releases. Fed’s Bostic spoke, but he already talked a bunch last week.
What he said today was (what I thought) a bit more hawkish. He did provide an optimistic yet cautious outlook on the economy and inflation. He indicated that inflation is on a path to return to the 2% target, but it’s premature to declare victory. Bostic expects two quarter-point rate cuts within the year, contingent upon further progress and increased confidence in disinflationary trends. That may have been a little less optimistic especially compared to other who see 3 as the most likely number of cuts in 2024. He added that despite the widespread nature of inflation, including in sectors like housing and real estate where monetary policy effects are evident, the overall strength of the economy and job market affords the Federal Reserve the ability to delay rate cuts without immediate concern. Bostic highlighted that businesses are not in distress; they are poised to invest and hire, pending favorable conditions. However, he warned of pent-up exuberance in the economy as a potential inflationary risk. A third-quarter rate cut is anticipated, likely to be succeeded by a pause (that is something new from a Fed official), underscoring the lack of urgency to adjust rates given the current economic strength. Bostic concluded by emphasizing that a return to price stability is achievable but not guaranteed, suggesting a careful and measured approach to monetary policy.
Overall for the day, the GBP is ending as the strongest of the major currencies ahead of the budget on Wednesday. The EUR was behind the GBP as the next strongest of the majors. The weakest was the JPY and NZD which are ending the day with similar declines vs the majors. The USD is ending the day with gains vs the JPY, CHF, CAD, AUD and NZD. It fell vs the EUR and GBP.
The strongest to the weakest of the major currencies
Gold is trading at its highest level after rising by $32.50 or 1.56% to $2115.20. Silver also surged today with a gain of $0.77 or 3.33% at $23.89. Silver is still well away from its all-time high at $30.09.
Crude oil fell today by -$1.24 or -1.55% at $78.33 after trading above $80 for the 2nd consecutive day, but could not sustain upside momentum The high price for the day reached $80.41 at session highs.
IN the US stock market, the major indices took a breather after closing at record levels on Friday for the broader S&P and NASDAQ indices. The final numbers are showing:
- Dow industrial average -97.55 points or -0.25% at 38989.84
- S&P index -6.13 points or -0.12% at 5130.94.
- NASDAQ index -67.44 points or -0.41% at 16207.50
The small-cap Russell 2000 index fell -2.086% or -0.10% at 2074.30.
In the US debt market:
- 2-year yield 4.610%, +7.7 basis points
- 5-year yield 4.209%, +5.0 basis points..
- 10-year yield 4.21%, +3.5 basis points
- 30-year yield 4.353%, +2.6 basis points
Thank you for your support. Good fortune with your trading.