03 April 2024- At a conference held by Stanford University in California, Jerome Powell commented on the current stance of the US economy and he answered some questions. Recently, the data on job gains and inflation came higher than expected, when commenting on this data, Jerome Powell said that it doesn’t change the big picture which is solid growth but a rebalancing labor market. Powell also said they have to step back and watch for the upcoming data to see if recent data is just a ‘bump’ on their way to the 2% inflation target. Powell again cited that seeing rate cuts is appropriate at some point this year. However, Atlanta Fed president Raphael Bostic had more hawkish comments about the current situation. He thinks that one cut might be enough which may take place towards the end of the year, reasoned by the idea that the prices of some important items have turned higher. Recent mixed data caused uncertainty in the market. This uncertainty led to stocks falling earlier this week and sent Treasury yields higher. Currently, the markets are pricing a 61.5% possibility of a rate cut starting on 12 June according to the CME FedWatch Tool (https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html)
In my article published last week (https://www.cattolicainvestmentclub.it/2024/03/29/better-than-expected-report-propels-clothing-retail-giant-into-new-territory/), I pointed out the idea about oil prices, currently, it is trading around $90 which experienced an almost %6 increase in just a week ($84.50 at the time of the article) this is due to the growing demand, increase of geopolitical tensions and OPEC+ restraint on production. The current momentum in oil prices is causing stress to investors. Francisco Blanch, a commodities strategist at Bank of America expressed his concerns about how the increase in oil prices might prevent the Fed from providing stimulus. It’s known that rising fuel prices contribute to headline inflation.
Author: Kaan Pinar