<h2>Key Highlights</h2> <ul><li>BoE Expected to Raise Rates to 5.25% from 5% on Aug. 3</li><li>Repeat of June's Half-Point Rate Rise Seen as Possible</li><li>UK Inflation of 7.9% Remains the Highest in the G7</li><li>Markets and Economists See Rates Hitting 5.75% This Year</li></ul> The Bank of England appears likely to increase interest rates by a quarter-point to 5.25% on Aug. 3, with the possibility of a repeat of June's surprise half-point hike, as inflation continues to outpace that of other major economies. <h2>A Divergence Among Central Banks</h2> While the U.S. Federal Reserve and the European Central Bank raised interest rates by a quarter of a percentage point this week, the market sentiment suggests that they might be nearing the end of their rate-tightening cycle. On the other hand, expectations regarding BoE rates have been fluctuating significantly since the last rate move on June 22. Investors are grappling with the question of whether the UK is facing a deeper inflation problem or if the rapid price growth will soon follow the trend seen in other economies, with a sharp slowdown. <h2>Evaluating Future Rate Scenarios</h2> Andrew Goodwin, Chief UK Economist at Oxford Economics, highlights that the trajectory of rates after August will hinge on the persistence of second-round effects, referring to the impact of last year's energy cost surge on wages and prices.Expectations for peak BoE rates reached 6.5% on July 11 following data showing record wage growth. However, these expectations subsided after a larger-than-expected decline in consumer price inflation. Presently, investors are divided between a peak rate of 5.75% or 6% later this year or in early 2024. <img src="https://cdn.forexoverflow.io/images/1690524309082-8p8xjtg8mlbxwbn-the-race-to-rasie-rates.png">Source from Reuters <h2>Economic Implications</h2> The surge in rate expectations has led to the highest mortgage costs since 2008, which, in turn, have put pressure on the housing and certain other sectors. Recent survey data revealed that private-sector growth had reached a six-month low this month. <h2>The Fine Balance of Decision Making</h2> In a Reuters poll, most economists predict a rate increase to 5.25% from the current 5% next week, with a potential peak at 5.75%. However, many analysts believe the decision is finely balanced. HSBC economists expect a rate rise to 5.5%, marking the central bank's 14th consecutive hike, in order to send a strong signal on inflation. BoE Governor Andrew Bailey emphasizes the importance of curbing inflation and Deputy Governor Dave Ramsden notes that inflation remains "much too high" despite recent declines. <h2>Inflation Figures and Labor Market Insights</h2> Consumer price inflation in June dropped to 7.9% from 8.7% in July, a significantly larger decline than anticipated, aligning it with the BoE's forecast in early May, when markets predicted rates to peak around 5%. Nonetheless, this inflation rate is nearly four times the BoE's 2% target and twice the rate of the United States. Regarding the job market, wage growth excluding bonuses remained at an annual rate of 7.3% in the three months to May, the joint highest since records began in 2001. However, unemployment unexpectedly rose to a 16-month high of 4%, and employers advertised fewer job vacancies. <h2>Perspectives on Data Interpretation</h2> RBC economists Peter Schaffrik and Cathal Kennedy assert that the interpretation of the data is subjective and could be used to support either 25 basis points or 50 basis points increases. With the end of Silvana Tenreyro's tenure on the BoE's Monetary Policy Committee, fellow external member Swati Dhingra may be the lone advocate arguing that producer price inflation is a better indicator of future consumer price inflation trends than wage growth. Annual producer price inflation fell to 0.1% in June, its lowest since December 2020, following a high of nearly 20% last July, which coincided with the peak of consumer price inflation at 11.1%. <h2>Anticipating Fresh Forecasts</h2> Alongside the rate decision, the BoE will update its growth and inflation forecasts. These are likely to be lower than the May forecasts due to higher market rate expectations, which significantly impact the overall forecast. The International Monetary Fund's forecast for Britain's economy predicts a growth rate of 0.4% this year, making it the second slowest among the Group of Seven advanced economies, only surpassing Germany. <h2>Emphasis on Inflation Persistence</h2> In recent months, the BoE has placed less emphasis on its medium-term forecast. BoE Governor Bailey and Chief Economist Huw Pill have shifted focus towards addressing the risk of inflation persistence, which may not be fully captured in the central forecast. This shift has led some, including HSBC, to assert that if the BoE believed its own forecasts, it would be considering rate cuts rather than rate hikes. In Summary, the Bank of England faces a delicate balancing act as it seeks to address the challenges of surging inflation while considering the nuances of economic data and projections. The upcoming rate decision and inflation forecasts will be crucial in shaping the path the central bank takes to stabilize the UK's economic landscape in the face of uncertainty.

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Bank of England Set to Raise Rates to 5.25% Amid Ongoing Inflationary Pressures. Explore the Factors Influencing the Central Bank's Decision and How it Aligns with Efforts to Tackle Inflationary Challenges in the Economy.

Bank of England's Rate Decision and Inflation

Bank of England Poised to Raise Rates to 5.25% as High Inflation Persists

<h2>Key Points:</h2> ·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2023, the Consumer Prices Index including owner occupiers' housing costs (CPIH) recorded a 7.3% increase over the previous 12 months, a slight decrease from May's 7.9%.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On a monthly basis, CPIH saw a 0.2% rise in June 2023, compared to a 0.7% increase in June 2022.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Consumer Prices Index (CPI) experienced a 7.9% increase over the 12 months leading up to June 2023, down from May's 8.7%.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Monthly, CPI rose by 0.1% in June 2023, as opposed to a 0.8% rise in June 2022.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The decline in motor fuel prices had the greatest impact on the decrease in both CPIH and CPI annual rates, while food prices rose in June 2023, albeit at a slower pace than in June 2022, contributing to a reduction in the inflation rates.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no significant factors counteracting the overall rate change.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Core CPIH, which excludes energy, food, alcohol, and tobacco, increased by 6.4% over the 12 months leading up to June 2023, slightly down from May's 6.5%. May's rate was the highest in over three decades. The annual rate of CPIH goods slowed from 9.7% to 8.5%, while the CPIH services annual rate remained unchanged at 6.3% from May.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Core CPI, excluding energy, food, alcohol, and tobacco, increased by 6.9% over the 12 months leading up to June 2023, a decrease from May's 7.1%, which was the highest rate since March 1992. The CPI goods annual rate slowed from 9.7% to 8.5%, while the CPI services annual rate eased from 7.4% to 7.2%. <h2>Annual CPIH and CPI inflation rates eased between May and June 2023</h2><h2>CPIH, OOH component and CPI annual inflation rates for the last 10 years,</h2> <img src="https://cdn.forexoverflow.io/images/1689788941987-m68y8wyo7e6jj6z-figure-1-annual-cpih-and-cpi-inflation-rates-eased-between-may-and-june-2023-1.png"> Source: Consumer price inflation from the Office for National Statistics<h2> </h2><h2>Consumer price inflation rates</h2> In the 12 months leading up to June 2023, the Consumer Prices Index including owner occupiers' housing costs (CPIH) witnessed a 7.3% increase, showing a slight decline from the previous month's 7.9% and a decrease from the peak of 9.6% reached in October 2022. Based on our indicative modelled consumer price inflation estimates, the October 2022 rate was the highest in over four decades, with the CPIH National Statistic series commencing in January 2006. The rate observed in June 2023 was the lowest since March 2022. The decrease in the annual rate between May and June 2023 can be attributed to a 0.2% monthly price increase, compared to a 0.7% rise during the same period the previous year. Similarly, the Consumer Prices Index (CPI) experienced a 7.9% increase over the 12 months leading up to June 2023, down from May's 8.7%, and a decrease from the peak of 11.1% in October 2022. Our indicative modelled consumer price inflation estimates suggest that the October 2022 peak represented the highest annual inflation rate since 1981, with the CPI National Statistic series beginning in January 1997. The rate observed in June 2023 was the lowest since March 2022. The easing in the CPI annual rate between May and June 2023 was the result of a 0.1% monthly price increase, compared to a 0.8% rise during the same period the previous year. The primary factors influencing the annual inflation rates for both CPIH and CPI align where applicable. However, the owner occupiers' housing costs (OOH) component, which accounts for 16.0% of the CPIH, primarily drives the differences observed between CPIH and CPI inflation rates.

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Uncover the unparalleled decline in UK consumer price inflation as June 2023 sets a new record low since March 2022.

Unprecedented Drop: June 2023 Sees UK's Lowest Inflation Rate Since March 2022"

UK Consumer Price Inflation Hits Record Low in June 2023

Global stocks witnessed a positive surge, and the dollar displayed strength on Wednesday following an unexpected decline in British inflation. This development bolstered the risk-off sentiment across various markets, particularly as market participants anticipate the Federal Reserve's final interest rate hike next week. The dollar experienced a rebound after the news of declining inflation in the United Kingdom, which dropped more than anticipated in June to its slowest pace in over a year, standing at 7.9%. Consequently, the pound faced a sharp decline against other major currencies. Positive Outlook for Global Markets The dollar index saw a rise of 0.398%, while the euro dipped 0.3% to $1.1192. Simultaneously, gold prices remained close to the eight-week peak reached on Tuesday, and oil prices witnessed an increase of over 1%. These movements in the market were driven by the expectation that the Federal Reserve's two-day meeting on July 26 would mark the conclusion of its most aggressive rate-hiking phase in more than four decades. Wall Street Gains Amid Earnings Season Wall Street experienced a rise in stock prices as investors chose to overlook Goldman Sachs' disappointing second-quarter earnings. Instead, they found comfort in the strong profits generated by smaller players in the banking sector. The KBW bank index (.BKX) achieved a 1.8% increase, marking its third consecutive day of gains. Citizens Financial (CFG.N) and M&amp;T Bank (MTB.N) outperformed Wall Street estimates for second-quarter profit, benefiting from the Federal Reserve's rapid rate hikes.According to Brad Conger, Deputy Chief Investment Officer at Hirtle Callaghan &amp; Co in Conshohocken, Pennsylvania, "The healthy state of global growth is evident. It is not declining, which is surprising and bodes well for future earnings. Additionally, interest rates, due to inflation, appear to have reached their peak." Positive Performance Across Global Indices The pan-European STOXX 600 index (.STOXX) rose by 0.37%, while MSCI's global stocks gauge (.MIWD00000PUS) increased by 0.17%.On Wall Street, the Dow Jones Industrial Average (.DJI) observed a rise of 0.39%, the S&amp;P 500 (.SPX) gained 0.27%, and the Nasdaq Composite (.IXIC) added 0.29%. Impact on Bond Yields and Treasury Notes Initially, euro zone bond yields declined following the release of British inflation data, which further indicated a global easing of price pressures. However, Germany's 10-year bond yield later increased by 4.3 basis points, reaching 2.391%. In the United States, the yield on two-year Treasury notes, which typically reflects interest rate expectations, fell by 0.6 basis points, settling at 4.747%. Moreover, the yield on benchmark 10-year notes dropped 1.5 basis points, resting at 3.774%. Oil Prices and Market Closing Brent crude oil hovered above the $80 per barrel mark, while U.S. crude experienced a 0.57% rise to $76.18 per barrel. Brent crude stood at $80.27, exhibiting an increase of 0.8% during the day. As the market closed, global stocks demonstrated a positive trajectory, propelled by the surprising decline in UK inflation and the optimistic outlook for future earnings.

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Global stocks as positive sentiment intensifies due to the slowdown in UK inflation, analyzing the market dynamics and evaluating the potential implications of this optimistic turn of events.

Global Stocks Rise as UK Inflation Slows, Boosting Sentiment

Global Stocks on the Rise: UK Inflation Slows, Boosting Sentiment

On Monday, the UK's FTSE 100 index experienced a slight decline influenced by the performance of mining and energy stocks. The decrease in metal prices resulted from weak economic data from China, the largest consumer of commodities. Simultaneously, the dip in crude oil prices affected the energy sector. Key Points: ·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weak Chinese economic data affects metal prices·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decline observed in the FTSE 100 and FTSE 250 midcap index·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pressure mounts on Chinese policymakers to stimulate the economy·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base metal prices decline, impacting industrial metal miners·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Energy stocks experience a decrease in line with lower oil prices·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Focus on UK consumer prices data as inflation eases in the US·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noteworthy US inflation figures and disinflation pattern·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UK inflation at a high of 8.7% YoY in May·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Falling residential home prices in the UK due to rising mortgage costs·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decline observed in housing-related stocks·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FTSE 100 drops over 7% since February's record high·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gresham House sees a significant surge in stock price·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Johnson Matthey receives a "buy" rating from Deutsche BankThe UK's FTSE 100 index experienced a minor setback of 0.1%, accompanied by a similar decline of 0.1% in the more domestically-focused FTSE 250 midcap index. The impact of this decline can be attributed to the release of weak economic data from China, which indicates a frail pace of growth in the second quarter. This decline in momentum after the COVID-19 pandemic has led to increasing pressure on Chinese policymakers to implement additional stimulus measures to stabilize economic activity. The prices of most base metals faced downward pressure, resulting in a 1.9% dip for industrial metal miners. Moreover, heavyweight energy stocks also experienced a decline of 0.4% due to lower oil prices. This convergence of factors has created an atmosphere of caution among investors, with a keen eye on short-term inflation in the UK. Alan Kinnaird, the business development manager at Walker Crips Investment Management, believes that the current inflation figures in the United States are particularly intriguing, especially considering the emergence of a disinflation pattern. In May, UK inflation hit an alarming 8.7% year-on-year. Additionally, an industry survey has indicated a fall in asking prices for residential homes in Britain during July. This decline can be attributed to rising mortgage costs and constraints on buyer affordability, which have prompted sellers to temper their price expectations. Consequently, stocks related to housing, such as real estate and homebuilders, witnessed a decline of nearly 0.5% each. The FTSE 100, which focuses significantly on commodities, has experienced losses of more than 7% since hitting record-highs in February. The fluctuation in oil and metal prices has been driven by concerns surrounding demand in China. The uncertainty associated with these commodities has played a significant role in affecting the overall performance of the FTSE 100 Index.Among individual stocks, Gresham House observed a significant surge of 55.5% in its stock price. This surge followed the announcement by U.S.-based investment firm Searchlight Capital Partners that it intends to acquire the alternative asset manager for £469.8 million ($614.9 million). Furthermore, Johnson Matthey experienced a gain of 0.9% after Deutsche Bank upgraded the chemicals maker's rating from "hold" to "buy." In Summary, the UK's FTSE 100 faced a slight decline driven by weak economic data from China. The decrease in metal prices and lower oil prices impacted mining and energy stocks. Attention is now directed towards UK consumer prices data, while also considering the easing inflation in the United States. UK inflation remains high, and the housing market has experienced a fall in prices due to rising mortgage costs. The FTSE 100, heavily dependent on commodities, has suffered significant losses since its record high in February. Individual stocks such as Gresham House and Johnson Matthey have witnessed notable changes in their stock prices following specific events and market upgrades.

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Dive into the impact of weak Chinese data on metal and energy stocks within the UK's FTSE 100.

FTSE 100 Slips: Weak Chinese Data Hits Metal and Energy

UK's FTSE 100 Slips as Weak Chinese Data Impacts Metal and Energy Stocks

Optimistic Outlook as Wall Street Continues to Rise Amid Inflation Data In recent days, global stock markets have experienced a surge in gains, while the value of the dollar remains close to a 15-month low. This wave of investor optimism was sparked by favorable U.S. inflation data, leading many to believe that the U.S. Federal Reserve is approaching the conclusion of its rate-hiking cycle. On Wednesday, data revealed that U.S. consumer prices had grown at the slowest pace in over two years. Following this, Thursday's report indicated the smallest increase in U.S. producer inflation in nearly three years. Additionally, the government reported on Friday that U.S. import prices had dropped by 0.2% last month, accompanied by a significant rise in U.S. consumer sentiment to its highest level in nearly two years. MSCI World Equity Index Surges to New Highs As investors anticipate a more moderate inflation outlook, the MSCI World Equity index (.MIWD00000PUS) has reached its peak for this year. On Friday, the index experienced a 0.1% increase, accumulating gains throughout the week and putting it on track for its most substantial weekly rise since November 2022 and its highest levels since early 2022. Wall Street's Fifth Consecutive Rise Fueled by Strong Earnings Wall Street continues its upward trajectory, with Friday marking the fifth consecutive day of gains. The second-quarter earnings season commenced on a positive note as some of the country's top financial institutions, including JPMorgan Chase (JPM.N) and insurer UnitedHealth Group (UNH.N), delivered robust performance reports.The Dow Jones Industrial Average (.DJI) rose by 0.45% to reach 34,549.15, while the S&amp;P 500 (.SPX) gained 0.10%, closing at 4,514.5. The Nasdaq Composite (.IXIC) also experienced growth, increasing by 0.12% to 14,155.78. European Stock Indexes Show Minimal Change In contrast, European stock indexes exhibited minimal change, with the STOXX (.STOXX) experiencing a slight decrease of 0.11%, and London's FTSE 100 dipping by 0.08% (.FTSE). Germany's DAX declined by 0.2%, retracing some of its recent gains (.GDAXI). Expert Advises Cautious Approach Amidst Concerns Michele Morganti, senior equity strategist at Generali Investments in Rome, advises caution given the current market conditions. He emphasizes that price-to-earnings ratios are "exuberant" compared to real rates and economic growth, especially in the United States. Morganti also highlights persistent sticky core inflation, tightening credit conditions, and macro indicators pointing downwards as factors contributing to the need for short-term caution in the equity market. U.S. Bond Yields Experience Modest Recovery After a period of sharp declines earlier in the week, U.S. government bond yields have slightly bounced back on Friday. The yield on 10-year Treasury notes increased by 5.7 basis points to 3.817%. The two-year U.S. Treasury yield, which typically aligns with interest rate expectations, rose by 14 basis points to 4.751%. Euro Zone Government Bond Yields Remain Steady Euro zone government bond yields displayed minimal fluctuations on Friday, holding onto their gains following a robust two-day rally triggered by subdued U.S. inflation figures. Money market traders still anticipate a 25 basis point rate hike by the Fed on July 26, although they have lowered the likelihood of another rate hike later this year. Norman Villamin, chief group strategist at UBP, suggests that another Fed rate hike is probable in July, but the September meeting remains uncertain. He acknowledges that we are likely approaching the end of the rate hike cycle. However, Villamin points out that above-target inflation is expected to persist in the long term, making it challenging to achieve a return to the 2% inflation target. Weaker Dollar Persists The value of the dollar continues to hover near a 15-month low, marking its most significant weekly decline since November due to softening U.S. inflation data. Meanwhile, the euro remains steady at $1.1232, reaching its highest level in over 16 months. Oil Markets Supported by U.S. Demand and Supply Disruption In the oil markets, the global benchmark Brent crude maintains a price around $80 per barrel on Friday. Bullish sentiment regarding U.S. demand has been bolstered by supply disruptions in Libya and Nigeria. Brent crude closed at $79.87, experiencing a decline of 1.83% on the day, while U.S. crude fell by 1.91% to $75.42 per barrel. Gold Prices Experience a Small Decline Following five consecutive sessions of gains, gold prices dipped slightly on Friday. Growing expectations of a pause in U.S. rate hikes have positioned bullion for its most substantial weekly gain since April. Spot gold declined to $1,960.24 per ounce. Summary With the release of favorable inflation data and positive earnings reports, global stock markets have seen significant gains. The MSCI World Equity index reached new highs, while Wall Street extended its winning streak. However, caution is advised by experts due to exuberant price-to-earnings ratios, persistent core inflation, and macro indicators signaling a potential slowdown. The dollar continues to weaken, and oil markets benefit from disrupted supply and optimistic U.S. demand. Gold prices experienced a slight decline but remain influenced by expectations regarding U.S. rate hikes. These recent developments are shaping the global financial landscape and have captured the attention of investors worldwide.

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Catch up on the market buzz as Wall Street rallies on the back of cooler inflation and positive earnings, driving the market gains.

Market Update: Wall Street Surges Higher on Cooler Inflation and Positive Earnings

Wall Street Extends Climb: Cooler Inflation and Positive Earnings Drive Market Gains

Key Takeaways <ol><li>Tech-related Shares Rally as US Inflation Cools Down</li><li>June Producer Prices Show Minimal Rise; Core PPI Subsides</li><li>Dow, S&amp;P 500, and Nasdaq Close with Gains of 0.1%, 0.9%, and 1.6%, respectively</li></ol> The US stock market continued its upward momentum on Thursday, with the Nasdaq experiencing its second consecutive day of over 1% growth. This surge came after data revealed that the annual increase in US producer inflation was the smallest it had been in almost three years. The latest reports provide further evidence of subsiding inflation pressures. Additionally, the Consumer Price Index (CPI) report published on Wednesday indicated that US consumer prices had witnessed their smallest annual increase in over two years. As a result, market sentiment suggests that the Federal Reserve will halt its rate hikes after the anticipated 25 basis points increase later this month. Mona Mahajan, Senior Investment Strategist at Edward Jones, stated, "PPI is another confirmation this week that inflation continues to trend in the right direction even as we see better overall labour market and consumer data. That is a good sign."The producer price index showed a modest climb of 0.1% over the 12 months leading up to June. This marks the smallest year-on-year gain since August 2020, following a 0.9% increase in May. The S&amp;P 500 received significant support from technology-related shares, particularly megacaps, which gained 2.7% and achieved a record-high closing. Additionally, US chip stocks rallied, with Nvidia reaching a new all-time high during the session and the Philadelphia semiconductor index rising by 2%. Despite the generally positive tone of the day, a separate report revealed an unexpected decrease in weekly jobless claims, indicating a persistently tight labour market. Inflation and Market Performance The Dow Jones Industrial Average rose by 47.71 points, or 0.14%, closing at 34,395.14. The S&amp;P 500 gained 37.88 points, or 0.85%, ending at 4,510.04, while the Nasdaq Composite added 219.61 points, or 1.58%, reaching 14,138.57. <img src="https://cdn.forexoverflow.io/images/1689315766886-0dz0w2iqdz3h392-us-inflation-gauges-1.png"> Source from Reuters&nbsp; US chip stocks, including Nvidia, experienced significant gains, with Nvidia attaining a new record high during the session. The Philadelphia semiconductor index also rose by 2%.Despite the optimistic outlook, a separate report indicated an unexpected decline in weekly jobless claims, suggesting a tight labour market. Market focus is now shifting to the second-quarter US earnings season, which commences this week. JPMorgan Chase, whose quarterly results are due before the opening bell on Friday, witnessed a 0.5% increase in its share value. Alan Lancz, President of Alan B. Lancz &amp; Associates Inc. in Toledo, Ohio, stated, "We might have another quarter here where the positive sentiment will continue. As long as expectations and guidance are in line, that's what a lot of institutional investors will be looking at." Delta Air Lines remained relatively stable after an initial increase due to news of a raised full-year profit outlook attributed to the ongoing post-pandemic travel boom. PepsiCo shares rose by 2.4% after the company revised its annual revenue and profit forecasts for the second time. Google parent Alphabet Inc witnessed a significant surge of 4.7% in its shares. The company announced the launch of its artificial intelligence chatbot, Bard, in Europe and Brazil, alleviating concerns regarding regulatory issues overseas. Market strategists have highlighted that the recent weakness in the US dollar may have positive implications for the future earnings of US multinational companies.The total trading volume on US exchanges amounted to 10.82 billion shares, slightly lower than the 11.11 billion average for the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE with a ratio of 2.90-to-1, while on the Nasdaq, advancers had a 1.93-to-1 ratio advantage. The S&amp;P 500 witnessed 51 new 52-week highs and one new low, while the Nasdaq Composite recorded 135 new highs and 39 new lows.

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Catch up on the market buzz as Wall Street maintains its winning streak, extending recent gains even as US inflation cools down.

Wall Street Ends Higher, Extending Recent Gains Amid Cooling US Inflation

Market Update: Wall Street Ends Higher, Extending Recent Gains Amid Cooling US Inflation

The dollar's value dropped to a 15-month low, signaling speculations of the Federal Reserve nearing the end of its rate hike cycle due to declining inflation. Reuters' report indicates that the dollar index, which measures the U.S. currency against six major rivals, reached its lowest point since April 2022 at 99.71 during early Asian hours. The ongoing decline in the dollar index suggests that this week may be the worst performance since November. Easing Inflation and Its Impact on the Dollar In June, U.S. producer prices experienced minimal growth, and the yearly increase in producer inflation was the smallest in almost three years, according to recent data released on Thursday. These findings were followed by modest consumer price growth, further supporting the notion that the world's largest economy is entering a phase of easing inflation. Currency strategist Carol Kong, from the Commonwealth Bank of Australia in Sydney, stated, "Markets are generally pleased with the lower inflation data, as it aligns with the resilient labor market, creating a narrative of a soft landing for the U.S. economy." However, Kong maintains the belief that the United States may face a recession later in the year due to the impact of past and potential future interest rate hikes. Market Expectations and Federal Reserve Outlook Current market expectations indicate a 92% likelihood of a 25 basis point hike from the Federal Reserve later this month, as shown by the CME FedWatch tool. However, no further hikes are anticipated for the remainder of the year. Recent data on weekly jobless claims and producer prices suggest a supportive environment for a soft landing, according to Ryan Brandham, head of global capital markets, North America, at Validus Risk Management.Federal Reserve Governor Christopher Waller expressed caution, stating that he is not ready to declare all clear on U.S. inflation and is in favor of additional rate hikes this year. Despite the encouraging trend of declining inflation, it is unlikely to be sufficient to sway the committee's decision. Global Currency Movements The Australian dollar experienced a slight decline of 0.16% to $0.688 following Michele Bullock's appointment as head of Australia's central bank, making her the first female governor as the bank undergoes a comprehensive reorganization. The euro reached a fresh 16-month high of $1.1229 during Asian trading hours before slightly retreating to $1.1222, while the pound traded at $1.3119, marking a 0.11% decrease for the day. Thursday saw the pound surpass $1.30 for the first time since April 2022. The Japanese yen strengthened by 0.23% to 137.71 per dollar, potentially achieving its most successful week against the dollar since January. Cryptocurrency Market Highlights Bitcoin experienced a marginal increase of 0.03% to $31,367.56, reaching near two-month highs of $31,818. Ethereum rose by 1.4% to $2,014.10. A U.S. judge ruled that Ripple Labs did not violate federal securities law by selling its XRP token on public exchanges.In summary, the dollar's decline to a 15-month low suggests that the Federal Reserve may be nearing the end of its rate hike cycle due to easing inflation. The market remains cautiously optimistic, while speculations of a U.S. recession persist. Global currency movements reflect the impact of these developments, while cryptocurrencies demonstrate mixed performances.

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Stay updated as the dollar reaches a 15-month low due to easing inflation, sparking speculation about a potential rate peak. Get insights into the evolving market dynamics.

Dollar at 15-Month Low as Inflation Eases, Fuels Speculation of Rate Peak

Asian stocks are experiencing a significant surge this week, positioning themselves for the most successful week of the year. This remarkable performance is driven by diminishing concerns over U.S. inflation, which has sparked speculation that the Federal Reserve might halt its rate hikes after the current month. As a result, the U.S. dollar has tumbled to a 15-month low against major counterparts, while U.S. Treasury yields remain at multi-week lows, following a substantial weekly decline. Simultaneously, gold is on track to achieve its most outstanding week in three months, benefitting from the weakened dollar, while crude oil prices climb to their highest level in nearly three months. <h2>Easing Inflation Concerns and Implications for Monetary Policy</h2> The likelihood of a quarter-point increase in the Fed funds rate on July 26 is still perceived as highly probable by money market traders. However, their expectations for additional rate hikes this year have diminished to just a 20% probability. This change in sentiment is primarily influenced by the recent data indicating the smallest rise in U.S. factory gate inflation in nearly three years. Moreover, a previous report revealed that consumer price gains have slowed to their weakest pace in over two years, reinforcing the notion of a more moderate inflation outlook. Tony Sycamore, a market analyst at IG in Sydney, explains the implications of these developments: "What it means is we've got the Fed with its chest pretty much crossing the finish line at the end of the most aggressive tightening cycle in four decades, so it does warrant the rapid repricing that we've seen in many of these asset classes. The equity market absolutely took off, and the dollar is under intense pressure." <h2>Performance of Asian Stocks and Global Markets</h2> The MSCI's broadest index of Asia-Pacific shares, excluding Japan, has rallied by 0.7% on Friday, positioning it for a substantial 5.4% weekly advancement, marking the most significant gain in eight months. Hong Kong's Hang Seng index has gained 0.52%, and mainland Chinese blue chips have added 0.12%. South Korea's Kospi, on the other hand, has surged by 1%. However, Japan's Nikkei is experiencing a different trajectory, with a decline of 0.43% after initially showing gains. The Nikkei is struggling to regain momentum after retreating from a 33-year peak reached earlier this month. In the United States, E-mini equity futures indicate a 0.16% lower opening for the S&amp;P 500 after the index rallied by 0.85% overnight. Additionally, the U.S. dollar index, which measures the currency against six major peers, has experienced a slight decline of approximately 0.1%, reaching 99.637 for the first time since April of last year. Tony Sycamore of IG suggests, "The dollar index can probably trade down toward 98 over the coming weeks without too many problems. I wouldn't be fighting that trend." <h2>Impact on Treasury Yields and Global Bonds</h2> U.S. two-year Treasury yields, which tend to be highly sensitive to the Federal Reserve's policy outlook, are currently stagnant at 4.63% following a 30 basis point decrease this week, extending the drop from last week's 16-year peak above 5%. Meanwhile, ten-year yields hover around 3.77% after a 28 basis point decline since last Friday, when it reached an eight-month high at 4.094%. In Japan's market, the 10-year yield has risen as high as 0.485%, approaching the Bank of Japan's 0.5% policy ceiling, the closest it has been since March 10. Speculation regarding the BOJ potentially widening its 10-year yield band this month has been increasing, driven by a recent labor report revealing solid wage growth. <h2>Market Reactions and Currency Movements</h2> The Australian government's appointment of deputy governor Michele Bullock to lead the Reserve Bank of Australia from mid-September had minimal impact on the markets. The Australian dollar remained steady at $0.6891, following two consecutive days of 1.5% gains against the U.S. dollar, propelling it to a one-month high. In the commodities market, gold has reached a new one-month high at $1,963.59, benefiting from the weakened dollar. It has demonstrated an impressive rally of nearly 2% over the course of this week. Additionally, Brent crude futures have risen by 27 cents, or 0.3%, to $81.63 per barrel on Friday, while U.S. West Texas Intermediate crude futures have increased by 35 cents, or 0.5%, to $77.24. In Summary, Asian stocks are on track for their best week in 2023, driven by a decrease in U.S. inflation concerns, which has generated speculation that the Federal Reserve might pause its rate hikes after this month. As a result, the U.S. dollar has weakened significantly against major peers, and U.S. Treasury yields remain at multi-week lows. These developments have had a positive impact on gold prices, which are poised for their strongest week in three months. Meanwhile, crude oil prices have reached their highest level in nearly three months. The performance of global markets, including Asian stocks and U.S. equities, is reflective of the changing sentiment surrounding the Federal Reserve's monetary policy.

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Get the latest market update as Asia stocks position themselves for a remarkable week in 2023, supported by a softening dollar driven by dovish Federal Reserve expectations.

Asia Stocks Poised for Stellar Week in 2023 as Dollar Weakens on Dovish Fed Speculation

Asia Stocks Ready for Outstanding Week in 2023 as Dollar Slides on Dovish Fed Speculation

<h2>Asian Equities Set for Record-Breaking Week Amid US Inflation Slowdowns</h2> Asian markets are poised to end the week on a high note, marking their most successful week of the year. The latest data indicating a deceleration in US inflation has fueled optimism that the Federal Reserve will halt rate hikes, sparking a robust rally across global markets. <h2>Encouraging Signs of Inflation Deceleration</h2> Investors welcomed the smallest increase in US factory gate inflation in almost three years. This positive development follows a 12-month slowdown in US consumer price inflation, bringing it to its lowest annual rate in over two years. <h2>Anticipating a Smooth Economic Transition</h2> While the full impact of the 500 basis points of rate hikes implemented by the Federal Reserve since March of last year is yet to be fully realized, the prevailing optimism surrounding a "soft landing" scenario has driven down the value of the US dollar and propelled asset prices upward. <h2>Asia's Economic Indicators and Market Impact</h2> Despite the release of key Asian economic indicators on Friday, such as Singapore's GDP, Japanese industrial production, and Indian wholesale price inflation, market sentiments remain largely unaffected. The prevailing bullish outlook appears to overshadow any potential disappointments. <h2>Global Market Conditions Benefit from Weaker Dollar and Lower Bond Yields</h2> The decline in the value of the US dollar, coupled with decreasing US bond yields, has created favorable financial conditions for global markets, particularly emerging economies. As a result, MSCI's World stock index surged by more than 1% on Thursday, reaching its highest point since April of last year. Additionally, both the S&amp;P 500 and Nasdaq reached fresh 15-month highs, while the MSCI Asia ex-Japan index experienced a notable jump of over 2%. <h2>Asia-Pacific Shares' Impressive Performance</h2> The broadest index of Asia and Pacific shares has witnessed a remarkable 5% increase this week, positioning it for the most outstanding performance since November. Notably, this surge compensates for the relatively lacklustre year-to-date gains, emphasizing the significant gap between these markets and their US, European, and Japanese counterparts. <h2>China's Struggles Impacting Global Markets</h2> China's economic woes, including sluggish growth, deflation, and a complex interplay between a devaluing exchange rate and widespread financial market sell-offs, have significantly weighed down Asia-Pacific shares. The latest economic signals from China continue to dampen market sentiment, with a 12.4% slump in exports in June—the most significant decline in three years—and a 6.8% drop in imports, both exceeding analysts' expectations. <h2>Positive Market Response to Beijing's Tech Sector Reassurance</h2> Despite the prevailing challenges, Chinese shares managed to rally over 1% following an announcement from Beijing signaling the end of its tech sector crackdown. Premier Li Qiang held discussions with leading tech firms, urging them to take greater measures to support the economy. <h2>Ongoing Dialogue Between China and the US</h2> High-level talks between Chinese and US officials persist, addressing various issues, including trade. This ongoing dialogue is expected to mitigate geopolitical risks, albeit to a limited extent.<h2> </h2><h2>Key Developments for Friday's Market Direction</h2>﻿Market participants eagerly await several key developments that could shape Friday's market trends, including:<ul><li>Singapore's Q2 GDP report</li><li>Japan's May industrial production figures</li><li>India's June wholesale price inflation data</li></ul>As these reports are released, market dynamics may experience shifts based on the outcomes, potentially influencing investor sentiment and asset valuations. In summary, Asian equities are experiencing their best week of the year, driven by positive market sentiment following signs of slowing U.S. inflation. The weakening dollar and falling U.S. bond yields have created favorable financial conditions globally. However, China continues to face economic challenges, while ongoing dialogue between Chinese and U.S. officials may help reduce geopolitical risks. Investors should closely monitor key developments such as Singapore's GDP, Japan's industrial production, and India's WPI inflation figures for further insights into market trends.

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Get the latest breaking news as US inflation cheer lifts stocks to their best week in 2023. Stay informed and make informed investment decisions.

Morning Market Update: US Inflation Cheer Drives Stocks to Best Week in 2023

Weekly Market Highlight: US Inflation Cheer Drives Stocks to Best Week in 2023

<h2>Asian Shares Surge, Dollar Declines Ahead of Crucial US Inflation Report</h2> According to reports from Reuters, Asian shares are on the rise while the dollar is slipping to a two-month low on Wednesday. Investors are eagerly awaiting a crucial U.S. inflation report, which will provide valuable insights into whether the Federal Reserve is nearing the end of its aggressive rate-hiking policy. The outcome of this report will play a significant role in shaping market expectations and investor sentiment. <h2>Positive Indications for European Markets</h2> Futures suggest that the risk-on rally will likely continue in Europe, with Eurostoxx 50 futures up by 0.44%, German DAX futures showing a 0.36% increase, and FTSE futures up by 0.30%. These positive indications set the stage for potential gains in the European markets. <h2>Asia-Pacific Shares Continue to Strengthen</h2> MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) has surged by 0.77%, marking its third consecutive day of gains. The index is currently up by 2% for the week, positioning itself for the best weekly gain in a month. This upward trend reflects improving investor sentiment and a growing regional appetite for risk. <h2>Focus on the Inflation Report</h2> Investors are closely focused on the forthcoming inflation report, which is expected to be released later in the day. According to economists surveyed by Reuters, the consumer price index is anticipated to have risen by 3.1% in June, following a 4% increase in May (USCPNY=ECI). The core rate, excluding volatile food and energy prices, is projected to have dropped for the third consecutive month to 5% from 5.3%, though it remains above the Federal Reserve's target of 2%. "I think there is a bit of nervousness ahead of the CPI," said Shane Oliver, head of investment strategy at AMP Capital. "There's optimism that it's going to show a further fall, but there's awareness, too, that core inflation has been sticky." This apprehension is driven by the market's recent strong performance and the potential need for a pause or consolidation. <h2>Market Expectations and Rate Hike Probabilities</h2> Market participants are currently pricing in a 92% chance of a 25-basis-point rate hike by the Federal Reserve later this month, according to the CME FedWatch tool. However, there are doubts about the likelihood of further rate hikes beyond that. Saxo Markets strategists suggest that if the core rate decelerates as expected, traders will likely keep the odds for rate hikes in September and November relatively low. <h2>Federal Reserve's Stance on Interest Rates</h2> Federal Reserve officials have expressed their intention to raise interest rates by at least another 50 basis points as they tackle persistent price pressures. Their commitment to controlling inflation and maintaining a balanced monetary policy continues to shape market expectations. <h2>Focus on Bank of Canada's Policy Decision</h2> Investor attention will also be on the policy decision from the Bank of Canada, with analysts predicting a second consecutive quarter-point interest rate hike. In June, the central bank raised its overnight rate to a 22-year high of 4.75% after a five-month pause, citing the need for less restrictive monetary policy. The decision to make further moves will depend on economic data. <h2>Concerns Over Inflation's Long-Term Impact</h2> Some economists, like Betashares chief economist David Bassanese, caution that it is still unclear whether a recession will ultimately be necessary to reduce inflation sustainably. He highlights tight labor markets and stubborn service sector inflation rates as factors contributing to this uncertainty. Bassanese emphasizes that central banks are concerned about the potential risk of entrenched inflation if it takes longer to bring it down. <h2>Mixed Performance in Asian Markets</h2> In Asia, Australia's S&amp;P/ASX 200 index (.AXJO) has risen by 0.42%, indicating positive sentiment in the market. However, Japan's Nikkei (.N225) has experienced a decline of 0.7%. China shares (.SSEC) have eased by 0.30%, while Hong Kong's Hang Seng Index (.HSI) has risen by 1% in early trading. China's extension of policies to support the real estate sector until the end of 2024 has fueled expectations of additional stimulus measures. <h2>Upcoming Second-Quarter Earnings Reports</h2> This week, attention will also be on the second-quarter earnings reports from major Wall Street institutions, including JPMorgan (JPM.N), Citigroup (C.N), and Wells Fargo (WFC.N). Wall Street banks are expected to report higher quarterly profits despite declining dealmaking, largely due to rising interest payments. <h2>Dollar Weakens in Currency Markets</h2> The dollar index, which measures the U.S. currency against six major peers, has fallen by 0.167% to 101.43 in the currency market. At its lowest point, the index reached 101.34, the lowest level in two months. The Japanese yen has strengthened, rising nearly 4% from a seven-month low of 145.07 it reached last month. Traders were on alert for possible intervention from Japanese authorities at that level. The yen currently stands at 139.52 against the dollar, having reached its highest levels in a month earlier in the session. The New Zealand dollar experienced choppy trading and is up by 0.26% after the country's central bank decided to keep interest rates unchanged at 5.50%. <h2>Stable Oil Prices</h2> U.S. crude prices have risen slightly by 0.01% to $74.84 per barrel, while Brent remains flat at $79.40 per barrel. Stable oil prices indicate a relatively calm market and are influenced by various factors such as global supply and demand dynamics, geopolitical tensions, and market sentiment. In summary, Asian stocks are gaining momentum while the dollar weakens ahead of the highly anticipated U.S. inflation report. Investor focus remains on the inflation data, as it will provide crucial insights into the Federal Reserve's monetary policy decisions. Additionally, the Bank of Canada's policy decision and upcoming earnings reports from major Wall Street institutions contribute to the market's current dynamics.

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Stay ahead of the trading game as traders eagerly await the US inflation data, witnessing the climb of Asia stocks and the decline of the dollar.

Market Update: Asia Stocks Rise, Dollar Slips Ahead of US Inflation Data

Stocks in Asia Rise, Dollar Slips as Traders Anticipate US Inflation Data

<h2>Key Highlights</h2> <ul><li>Federal Reserve officials indicate that the cycle of rate hikes is approaching its conclusion.</li><li>The dollar experiences a decline, reaching a three-week low against the yen.</li><li>The market's attention shifts to the release of U.S. inflation data on Wednesday.</li><li>Following the publication of inflation data, the Norwegian crown emerges as the top gainer in the foreign exchange market.</li><li>Chinese inflation data exerts pressure on the yuan, although it remains relatively stable compared to the dollar.</li></ul> According to reports from Reuters, the US dollar plunged to a three-week low on Monday following comments from Federal Reserve officials that reinforced market expectations of an imminent end to the tightening cycle by the US central bank. Despite Friday's data revealing the smallest job gains in 2-1/2 years, the Fed is widely anticipated to raise interest rates by another 25 basis points this month. The expected rate hike in July would come after a pause by the Fed in June. Various Fed officials, led by San Francisco Fed President Mary Daly, indicated on Monday that while the central bank may need to raise interest rates further to combat persistently high inflation, the current monetary policy tightening cycle is nearing its conclusion. In afternoon trading, the dollar index, which tracks the US currency against major peers, slipped 0.3% to 101.98, reaching a three-week low. The euro climbed to three-month highs against the dollar, touching $1.0997 before settling at $1.0995, reflecting a 0.2% increase. Against the yen, the dollar dropped to its lowest level since June 21, reaching 141.32 yen. It was last down 0.6% at 141.335. Following weaker-than-expected US nonfarm payrolls data for June, which missed market expectations for the first time in 15 months, the greenback slid nearly 1.3% on Friday. Erik Nelson, macro strategist at Wells Fargo in London, stated, "The weaker pressure on the dollar has been hard to reconcile from a relative rates and growth standpoint. U.S. growth has outperformed expectations, while Europe and China have underperformed. I think the U.S. economy is stronger than we give it credit for." While Friday's employment report highlighted consistently strong wage growth, market expectations of a further rate hike later this month remained intact. Anticipated rate cuts in 2023, which were once expected, now seem unlikely. Attention now turns to US inflation data scheduled for release on Wednesday, with expectations for core CPI to show a 5% annual increase in June. In other currency news, the Norwegian crown, which has been the second-weakest performing currency in the G10 this year, strengthened following data that revealed continued rise in core inflation in June, reaching a new record. Consequently, the Norwegian crown firmed against both the dollar and the euro. The dollar was last down 1% at 10.493 Norwegian crowns, while the euro dropped nearly 1% to 11.5363 Norwegian crowns. The Chinese yuan experienced a decline against the dollar due to weak inflation figures in the world's second-largest economy. Data released on Monday showed that factory-gate prices fell at the fastest pace in 7-1/2 years in June, while consumer inflation reached its slowest rate since 2021. These numbers fueled hopes for additional support measures from Chinese authorities. The US dollar remained relatively unchanged against the offshore yuan at 7.230. The weak Chinese data had a negative impact on the Australian and New Zealand dollars, often used as liquid proxies for the Chinese yuan. The Aussie dollar fell by 0.2% to US$0.6677, while the New Zealand dollar reversed losses to trade 0.1% higher at US$0.6215.

Find out the implications of the Fed's rate hikes as the US Dollar tumbles.

US Dollar at Three-Week Low: Fed's Rate Hikes End

Fed's Rate Hikes: US Dollar Drops to Three-Week Low

Key Highlights <ul><li>Citigroup downgrades U.S. stocks to "neutral" from "overweight"</li><li>China faces deflationary pressure as consumer prices weaken</li><li>Carl Icahn separates personal loans from IEP's share price</li><li>Indexes show mixed results: Dow rises 0.58%, S&amp;P up 0.22%, Nasdaq slips 0.18%</li></ul> According to Reuters reports, on Monday, the S&amp;P 500 and the Dow rebounded, recovering from losses experienced last week. Investors are now eagerly anticipating a crucial inflation report and the comments from several Federal Reserve officials scheduled for this week. These updates will provide insights into the central bank's approach to interest rates. All eyes are on the upcoming U.S. inflation data, expected to be released on Wednesday. This data will play a significant role in shaping the Federal Reserve's interest rate decision later this month. Economists surveyed by Reuters predict that consumer price growth likely slowed down in June. Thomas Hayes, chairman at Great Hill Capital, described the current situation as an "information vacuum" until Wednesday. Citigroup strategists downgraded U.S. stocks to a "neutral" rating, emphasizing that megacap growth is due for a pullback and warning about potential U.S. recession risks. Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley, commented, "This week has the potential to tip short-term momentum either way, depending on how traders react to inflation data (CPI and PPI) and the first batch of Q2 earnings." This week marks the beginning of the second-quarter earnings reporting period, and investors will be assessing the impact of tight monetary conditions and concerns about an impending economic slowdown on businesses. According to Refinitiv data, earnings for S&amp;P 500 constituents are expected to decline by 5.7% in the second quarter. Last week, Wall Street's main indexes ended lower after a jobs report indicated a decline in unemployment for June. However, higher-than-anticipated wage growth suggested a strong labor market. Traders still anticipate a 25 basis points rate hike by the U.S. central bank later this month. However, there is divided opinion on the trajectory of rate hikes for the rest of the year. Big banks such as JPMorgan Chase and Citigroup saw slight gains ahead of their earnings reports scheduled for Friday. At 10:03 a.m. ET, the Dow Jones Industrial Average was up 196.47 points or 0.58% at 33,931.35, the S&amp;P 500 was up 9.58 points or 0.22% at 4,408.53, and the Nasdaq Composite was down 24.73 points or 0.18% at 13,635.98. Among the 11 major S&amp;P 500 sectors, seven advanced in early trading, with industrials leading the gains with a rise of 1.3%. Home Depot was one of the top gainers on the Dow, climbing 1.8% after Jefferies raised its price target on the home improvement retailer. Meta Platforms added 0.7% after founder Mark Zuckerberg announced that 100 million users have signed up on the conglomerate's latest social media platform, Threads. However, most other megacap growth and technology stocks experienced declines, with the FANG index sliding 1.8%. Icahn Enterprises saw a significant jump of 15.5% after the investment firm announced that Carl Icahn and banks have finalized amended loan agreements, which separate the activist investor's personal loans from the trading price of his firm. Chipmakers like Intel and Qualcomm recorded gains of 0.9% and 1.1%, respectively, following U.S. Treasury Secretary Janet Yellen's statement over the weekend. Yellen mentioned that meetings with senior Chinese officials were "direct" and "productive". Advancing issues outnumbered decliners with a ratio of 2.45-to-1 on the NYSE and 2.09-to-1 on the Nasdaq. The S&amp;P index recorded 20 new 52-week highs and four new lows, while the Nasdaq recorded 33 new highs and 24 new lows.

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Brace yourself for the impact of inflation data as the Dow and S&P 500 open higher. Gain insights into market movements and navigate with confidence.

Inflation Data on Horizon: Dow and S&P 500 Rise

Dow and S&P 500 Open Higher Ahead of Inflation Data

The International Monetary Fund (IMF) stated on Friday that the United States will likely need to maintain higher interest rates for a longer period to control inflation. The IMF's "Article IV" review of U.S. policies revealed that although the U.S. economy has demonstrated resilience in the face of tighter monetary and fiscal policies, inflation has been more persistent than expected.

In its review, the IMF provided a full-year growth forecast of 1.7% for 2023, slightly higher than its April estimate of 1.6%. However, it projected lower output of 1.2% compared to the fourth quarter of the previous year.

The IMF forecasted that the federal funds rate would peak at 5.4% this year, surpassing the nominal 5.25% Fed rate, and then gradually decrease to 4.9% by 2024.

"While core and headline PCE inflation are expected to continue falling during 2023, they will remain materially above the Fed's 2% target throughout 2023 and 2024," the IMF stated.

IMF Managing Director Kristalina Georgieva emphasized the need for the U.S. government to reduce deficits, particularly by increasing tax revenues.

"The sooner this adjustment is implemented, the better. It is worth noting that the fiscal adjustment can be front-loaded, and by doing so, it would assist the Fed in its efforts to curb inflation," Georgieva said.

Georgieva expressed hope that a last-minute resolution to the U.S. debt ceiling crisis would be reached in Washington, thus avoiding a catastrophic default that would cause further disruptions to the global economy.

"The U.S. Treasury market is the foundation of stability for the global financial system. If you disturb this foundation, the world economy—the ship we all travel on—will encounter choppy and uncharted waters," Georgieva warned, adding that this would occur at a time when many economies were contracting.

She also urged U.S. lawmakers to find an alternative method for managing debt that eliminates the need for debt ceiling brinkmanship through the annual appropriations process.


The International Monetary Fund (IMF) stated on Friday that the United States will likely need to maintain higher interest rates for a longer period to control inflation. The IMF's "Article IV" review...

IMF's Prescription for Inflation: Stronger Fiscal Policy Needed in the U.S.!

•	*Experts believe the recent surge in inflation increases the likelihood of a rate hike by the Federal Reserve.*

•	*Some critics argue that this move by the Fed is not the right direction to take, as it further raises the odds of a rate hike.*

•	*Before the Federal Open Market Committee (FOMC) meeting, reports on employment and consumer prices are expected to be released.*

Further disappointing inflation news could potentially persuade Federal Reserve policymakers to raise interest rates once again. This would provide support for those who argue that more actions are necessary to restore price stability.

On Friday, figures from the Commerce Department revealed that the personal consumption expenditures price index, which is the Federal Reserve's preferred measure of inflation, increased by a faster-than-expected 0.4% in April.

Cleveland Fed President Loretta Mester expressed her belief in a CNBC interview on Friday that based on the inflation data, some tightening of monetary policy will likely be required. She mentioned that all possibilities are on the table for June.

Compared to the previous month, the measure has risen by 4.4% from a year ago, slightly higher than the 4.2% increase seen earlier. When excluding food and energy, the core PCE index, which is another inflation measure, rose by 0.4% compared to the previous month and 4.7% from April 2022.

Diane Swonk, chief economist at KPMG LLP, criticized the direction the Federal Reserve is taking, stating that a hike in July is now a possibility depending on resolving debt ceiling issues.

In an effort to control inflation, officials have raised rates by 5 percentage points over the past 14 months, surpassing their 2% target. Following a quarter-point increase earlier this month, the benchmark rate now stands within a target range of 5% to 5.25%. Fed Chair Jerome Powell mentioned that policymakers have the flexibility to observe the data and the evolving economic outlook.

Before the Federal Open Market Committee's next meeting on June 13-14, policymakers will receive additional information regarding employment and consumer prices. However, there may be hesitancy to raise rates as long as there is uncertainty surrounding the ongoing debt ceiling negotiations in Congress.

Nevertheless, investors have increased their bets on a rate hike in the upcoming month, with the likelihood rising to over 50% from 18% just a week ago. This shift reflects recent hawkish speeches from Fed officials and indications of economic strength. According to the report released on Friday, consumer spending, adjusted for prices, increased by 0.5%, marking the strongest growth since the beginning of the year. Treasury yields saw a surge following the report.

Kathy Bostjancic, chief economist at Nationwide Life Insurance Co., commented that the combination of rising inflation and robust consumer spending increases the chances of another rate hike in mid-June.

However, some Fed officials, such as Atlanta Fed's Raphael Bostic and Philadelphia's Patrick Harker, have emphasized that the impact of credit issues stemming from banking failures has yet to be felt. They also noted that monetary policy operates with a lag, meaning the full consequences of higher rates may not be seen in official data yet.

Derek Tang, an economist at LH Meyer/Monetary Policy Analytics, stated that it will take more to sway policymakers from pausing in June, but the possibility of another hike thereafter has increased. Tang's firm revised their peak rate forecast from 5.1% to 5.6% on Friday. He added that the stronger the data flow, the more likely it is for the next hike to occur in July rather than September.

"Persistence has its limits, and patience will wear thin if the economy continues to boom and bank stress does not worsen," Tang remarked.

Minutes from the May 2-3 meeting indicated that policymakers were uncertain about the extent of additional tightening needed, weighing the slower progress on inflation against the resilient labor market and the potential credit crunch resulting from recent banking turmoil.

Goldman Sachs economists, in a note on Friday, stated their expectation for the Fed to maintain steady rates in June. However, they acknowledged that the stronger-than-anticipated consumer spending and inflation data, along with the varied views among FOMC participants regarding the appropriate policy path, make the decision a close call.

In a statement on Friday, the International Monetary Fund (IMF) suggested that the Fed should raise interest rates by a quarter point to bring inflation back to 2%. The IMF also recommended that policymakers emphasize the need for rates to remain high for an extended period to align financial conditions with the intended policy trajectory, while highlighting that policy decisions will depend on incoming data.

Ethan Harris, head of global economics research at Bank of America Corp, noted that the Fed is clearly dependent on data in its decision-making process. In this uncertain environment, he added, every central bank, including the Fed, will be flexible in navigating the path forward.


•	*Experts believe the recent surge in inflation increases the likelihood of a rate hike by the Federal Reserve.*

•	*Some critics argue that this move by the Fed is not the right direction to take, a...

Inflation Flames Ignite: Fed Contemplates June/July Rate Hike to Tame the Heat!

The personal consumption expenditure index, which is the Federal Reserve's preferred measure of inflation, experienced a rise of 4.4% in April.

Following four consecutive weeks of decline, the Baker Hughes count of active oil rigs, oil futures witnessed an increase.

ConocoPhillips, a prominent player in the oil industry, has announced its decision to exercise its right to acquire the remaining 50% stake in the Surmont oil-sands project from Total Energies EP Canada. This transaction amounts to $3 billion, with additional contingent payments reaching up to $325 million.

Petróleo Brasleiro, the state-controlled oil company of Brazil, has made a request to the country's environmental agency to overturn their previous decision to block the company from drilling a well in the northern coastal region.



The personal consumption expenditure index, which is the Federal Reserve's preferred measure of inflation, experienced a rise of 4.4% in April.

Following four consecutive weeks of decline, the Baker ...

Energy Markets Take a Hit: Unraveling the Fallout of Inflation Data on Crude Oil in the Roundup!

Another disappointing update on inflation could sway the minds of Federal Reserve policymakers towards another interest rate hike, providing support for those who argue that more action is necessary to restore price stability.

According to figures released by the Commerce Department on Friday, the personal consumption expenditures price index, which is the Fed's preferred measure of inflation, experienced a faster-than-anticipated increase of 0.4% in April.

Cleveland Fed President Loretta Mester expressed her view on the matter in an interview with CNBC later that day, stating, "When I analyze the data and observe the inflation numbers, I believe we will have to implement further tightening. All possibilities are being considered for June."

In comparison to the previous month, the measure rose by 4.4% over the past year, slightly surpassing the 4.2% growth. Excluding food and energy, the core PCE index, often referred to as the core inflation rate, saw a 0.4% rise from the previous month and a 4.7% increase from April 2022.

Diane Swonk, chief economist at KPMG LLP, expressed concern about the Fed's direction, stating, "This is not the right path for the Fed. The outcome in June will depend on resolving the debt ceiling issues, but a rate hike in July is now a possibility."

Over the past 14 months, officials have raised rates by 5 percentage points in an attempt to control inflation, which has exceeded their target of 2%. Following a quarter-point increase earlier this month, the benchmark rate now stands at a target range of 5% to 5.25%. Fed Chair Jerome Powell stated a week ago that policymakers could afford to monitor the data and the changing economic outlook.

Before the next meeting of the Federal Open Market Committee on June 13-14, policymakers will receive additional data on employment and consumer prices. They may also hesitate to raise rates as long as there is uncertainty surrounding the outcome of the debt ceiling negotiations in Congress.

However, investors have started to increase their expectations of a rate hike next month to over 50%, up from 18% just a week ago. This shift in sentiment is driven by recent hawkish speeches by Fed officials, as well as signs of economic strength. The report on Friday revealed that consumer spending, adjusted for prices, experienced a 0.5% increase, marking the strongest growth since the beginning of the year. Following the release of the report, Treasury yields saw a significant rise.


Another disappointing update on inflation could sway the minds of Federal Reserve policymakers towards another interest rate hike, providing support for those who argue that more action is necessary t...

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inflation

16 articles published related to#inflation

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