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- A + A BENGALURU (June 23): Gold prices eased on Thursday (June 23), pressured by expectations of aggressive interest rate increases after the US Federal Reserve (Fed) chief doubled down on the central bank's fight against inflation. Spot gold had fallen 0.2% to US$1,834.33 (about RM8,084.81) per ounce by 0733 GMT. US gold futures eased 0.1% to US$1,835.60. "With [Fed chair Jerome] Powell pointing out overnight that 1% rises were a real possibility, it's a reminder of that constant pressure on gold prices from rising interest rates," said Michael McCarthy, the chief strategy officer of Tiger Brokers in Australia. When asked by a member of the Senate Banking Committee if the Fed could raise rates by as much as 100 basis points at once, Powell said he would never take anything off the table, and officials would make whatever moves as needed to restore price stability. Gold is often viewed as a hedge against inflation and a safe haven during economic crises, like a … [Read more...] about Gold dips after US Fed chief pledged to keep up inflation fight

Fed chair Jerome Powell Federal Reserve Chair Jerome Powell on Thursday downplayed the idea that government pandemic aid was the key factor fueling US inflation, instead blaming a confluence of global issues including the war in Ukraine. While stimulus spending was a factor, "a great deal of the price increases that you saw were a matter of supply being unable to meet demand" and "when demand hits fixed supply, what happens is prices go up," Powell told lawmakers. US inflation has surged to a 40-year high, picking up speed in recent months as the fallout from Russia's invasion of Ukraine has sent fuel and food prices soaring, with gas at more than $5 a gallon for the first time -- putting strain on American families. Opposition Republicans have blamed President Joe Biden's $1.9 trillion American Rescue Plan approved last year for the blistering price increases. But Powell, who was testifying Thursday before a House committee, and others have noted that inflation is a … [Read more...] about Fed chief Jerome Powell says pandemic aid not primary driver of US inflation

- A + A NEW YORK (June 25): The US dollar slipped on Friday (June 24) and posted its first weekly decline this month as traders pared back bets on where interest rates may peak and brought forward their outlook on the timing of rate cuts to counter a possible recession. A significant factor this week has been the fall in oil and commodity prices, which has eased inflation fears and allowed equity markets to rebound. This has eroded the safe-haven bid that has been boosting the dollar against major currencies. "Falling commodity prices could help pull headline inflation prints downwards — particularly into the autumn months — reducing the need for aggressive monetary tightening," said Karl Schamotta, the chief market strategist of payments company Corpay in Toronto. US federal funds futures on Friday priced in a 73% probability of a 75-basis-point (bps) increase in the July meeting. But for September, the market has fully factored in just a 50bps rise. The market … [Read more...] about US dollar retreats as markets reassess Fed rate path

Share to Twitter Share to Linkedin Topline As a growing number of investment banks and company chiefs warn that the likelihood of a recession is increasing, analysts at Morgan Stanley are telling clients that the stock market—despite reeling from a steep selloff in recent weeks—has plenty of room to fall before hitting levels consistent with recession-era lows, which would be especially bad for cyclical industries like travel and hospitality. Key Facts Despite major stock indexes plunging more than 20% below recent highs, markets are still only down by about 60% of the average drawdown compared with previous recessions (which denote two consecutive quarters of negative GDP growth), Morgan Stanley analysts told clients in a Tuesday note. As the Federal Reserve works to combat decades-high inflation with interest rate hikes that will likely stunt economic growth, a recession “is no longer just a tail risk,” analysts led by Michael Wilson wrote, … [Read more...] about Stock Market Could Crash Another 20% If U.S. Plunges Into Recession—These Industries Are Most At Risk

Share to Twitter Share to Linkedin Topline Despite increased concerns over a looming recession, a growing number of experts believe that upcoming discounts and easing supply chain disruptions may help cool the rate of inflation more quickly than expected, potentially offering a much-needed respite to cash-strapped Americans and investors wary over the implications of rapidly tightening monetary policy. Key Facts Though spiking gas prices may push overall inflation higher this year, core inflation, which excludes volatile food and energy prices, has peaked “and will fall faster than markets and the Federal Reserve expect,” economists at Pantheon Macro wrote in a Wednesday note. With a stronger dollar starting to make imports cheaper and rising inventories starting to quell supply shortages, the economists project inflation, which unexpectedly hit a 41-year high of 8.6% in May, will fall to 4.9% by the beginning of next year as core inflation … [Read more...] about Why A Strong Dollar And Retail Inventory Blunders Could Help Push Inflation Down By Next Year

- A + A NEW YORK/BENGALURU (June 24): Wall Street's main indexes climbed more than 2% on Friday, as signs of slowing economic growth and a recent weakening of commodity prices tempered expectations over how high the Federal Reserve will raise interest rates to rein in inflation. Global financial markets have been roiled this month on worries that rapid rate hikes by major central banks could cause a recession, with the benchmark S&P 500 confirming a bear market last week as it recorded a 20% drop from its January closing peak. The three main indexes looked set to notch their first weekly gain of the month, boosted by megacap growth stocks and defensive sectors such as healthcare and utilities seen as safer bets during times of economic uncertainty. "The reality is there's some optimism that the weakening economy, the stronger potential for a recession down the road could actually impede the Fed's aggressive hiking schedule," said Ryan Detrick, chief market … [Read more...] about Wall St rallies as traders dial back rate-hike bets

- A + A NEW YORK (June 25): Stocks on global markets rallied on Friday (June 24) and registered strong gains for the week as a recent slide in commodity prices eased worries about inflation and the rate hike outlook. The S&P 500 climbed 3.1% in its biggest daily percentage gain since May 2020, and the MSCI global index rose 4.8% for the week, snapping three straight weeks of declines. US Treasury yields edged up from two-week lows. Investors have been worried that aggressive interest rate hikes by the US Federal Reserve (Fed) and other major central banks to combat inflation could cause a recession, which would reduce demand for commodities and other items. "The [stock] market came into this week oversold, so it was time for a bounce," said Quincy Krosby, the chief equity strategist of LPL Financial in Charlotte, North Carolina. "We've seen oil prices come down along with other commodity prices," she said, adding that the market's move is reflecting … [Read more...] about Stocks gain sharply for day and week, while copper falls further

Today, Federal Reserve Chair Jerome Powell will deliver the first day of his two-day semiannual testimony on monetary policy before the Senate Banking Committee and the House Financial Services Committee. The big questions will likely focus on whether or not the Fed’s more aggressive rate hikes will push the U.S. economy into a recession . Of the Federal Reserve’s previous 12 cycles of hiking interest rates since the 1950s, nine have ended in recession. Major banks are raising bets the Fed will not be able to avoid a recession, as Goldman Sachs economists raised estimates for the risk of a recession up to 30%, from 15%. Over the next two years, Goldman now forecasts the probability of a recession at 48%. Economists at Morgan Stanley placed the odds of a recession for the next 12 months at around 35%. Nomura says a U.S. recession by the end of this year is now more likely than not. In a note, Nomura forecast a mild recession starting in the fourth quarter of this year. The … [Read more...] about Powell to Testify Before Congress

- A + A (June 23): Wall Street's main indexes ended with slim losses on Wednesday after choppy trading as energy shares weighed and investors digested Federal Reserve Chair Jerome Powell's comments on the central bank's aim to bring down inflation. After opening lower, major US indexes had erased losses following Powell's testimony before a Senate committee, but then they faded into the close. Powell said the Fed is "strongly committed" to bringing down inflation that is running at a 40-year high while policymakers are not trying to cause a recession in the process. Investors are trying to assess how far stocks could fall as they weigh risks to the economy with the Fed hiking rates to tamp down surging inflation. The S&P 500 earlier this month fell over 20% from its January all-time high, confirming the common definition of a bear market, with the benchmark index last week logging its biggest weekly percentage drop since March 2020. “Markets continue to be … [Read more...] about Wall Street ends lower after Powell remarks, as energy shares drag

(CNN) The record run-up in home prices and rents exacerbated the affordable housing crisis in the US, and rising interest rates stand to make it even worse, according to Harvard University's annual State of the Nation's Housing Report released Wednesday. Although quickly rising mortgage rates are already appearing to cool overheated housing markets, they are putting the homeownership dreams of millions of Americans even further out of reach, researchers and housing industry experts said. These renters were hit hardest by the pandemic and they're still struggling The income needed to qualify for a home has skyrocketed: The mortgage, property tax and insurance payments for a median-priced home of $340,700 cost $700 more per month in April 2022 than they did a year before. And the annual income needed to qualify for such a home is $28,000 higher in April 2022 versus last year, according to Harvard's Joint Center for Housing Studies, which analyzed data from … [Read more...] about The dream of owning a home is out of reach for 4 million Americans