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The US Federal Reserve continues to build a case for starting to cut interest rates. Fed boss Jerome Powell said yesterday 2Q 2024 US inflation readings “add somewhat to confidence” that inflation is heading towards the central bank’s 2% target, Financial Times reported. His remarks add to speculation that the Fed could start cutting interest rates as soon as September.
What he said: “Our test has been for quite some time that we want to have greater confidence that inflation was moving sustainably down towards our 2 percent target, and what increases confidence in that is more good inflation data,” Powell said at an event at the Economic Club of Washington. “And lately, we have been getting some of that.”
But Powell isn’t calling the ball: “Today I’m not going to be sending any signals one way or the other on any particular meeting,” Powell said. “Just to ruin the fun right at the beginning.”
Powell has been (cautiously) talking up the idea that inflation is cooling: He told Congress last week that he has “some confidence” that inflation is heading toward the 2% mark. He also said that the Fed doesn’t necessarily need to wait for inflation to fall to 2% before moving on interest rate cuts, adding to the speculation that the first cut could come this fall.
AND- Powell said that risks to the labor market were a key focus for the Fed along with elevated. “Now that inflation has come down and the labor market has indeed cooled off, we’re going to be looking at both mandates,” Powell said. “They’re in much better balance.” He said that “an unexpected weakening” in the labor market could stir a reaction by the central bank.
WHY THIS MATTERS- Powell’s comments were the last remarks he is scheduled to make before the Fed meets on July 30-31 at which the bank is widely seen leaving rates unchanged. The earliest most analysts expect a rate cut is at the September policy meeting.
MARKETS THIS MORNING-
Powell’s remarks yesterday were in line with market expectations and did little to move markets: Major Asian benchmarks are mixed this morning, with no big swing to in sight.
Across the pond: The Dow closed at another record high yesterday, gaining 200 points as traders shrugged off the attempted assassination of Donald Trump. Wall Street futures were up in overnight trading, while all of the major European benchmarks we track were down slightly.
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TASI |
11,948 |
+0.6% (YTD: -0.2%) |
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MSCI Tadawul 30 |
1,498 |
+0.7% (YTD: -3.4%) |
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NomuC |
25,850 |
+0.6% (YTD: +5.4%) |
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USD : SAR (SAMA) |
USD 3.75 Sell |
USD 3.75 Buy |
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Interest rates |
6.0% repo |
5.5% reverse repo |
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EGX30 |
27,952 |
-0.3% (YTD: +12.3%) |
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ADX |
9,145 |
0.0% (YTD: -4.5%) |
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DFM |
4,115 |
+0.3% (YTD: +1.4%) |
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S&P 500 |
5,631 |
+0.3% (YTD: +18.1%) |
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FTSE 100 |
8,183 |
-0.9% (YTD: +5.8%) |
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Euro Stoxx 50 |
4,983 |
-1.2% (YTD: +10.2%) |
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Brent crude |
84.77 |
-0.1% |
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Natural gas (Nymex) |
2.16 |
+0.1% |
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Gold |
USD 2,428.90 |
+0.3% |
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BTC |
USD 63,612 |
+4.5% (YTD: +51.4%) |
THE CLOSING BELL: TADAWUL-
The TASI rose 0.6% yesterday on turnover of SAR 7.2 bn. The index is down 0.2% YTD.
In the green: Al Sagr Ins. (+10.0%), Gasco (+6.0%) and Jazira Takaful (+5.3%).
In the red: Talco (-7.7%), Rasan (-7.1%) and MBC Group (-6.5%).
THE CLOSING BELL: NOMU-
The NomuC rose 0.6% yesterday on turnover of SAR 37.4 mn. The index is up 5.4% YTD.
In the green: Future Care (+10.3%), NBM (+10.0%) and Ghida Al Sultan (+6.1%).
In the red: Ladun (-7.4%), Fesh Fash (-4.7%) and AZM (-4.7%)
