Market News June 2 Financial Breakfast: Saudi Arabia may make up for the Russian gap, oil prices plunged more than 3% to a one-week low, the Fed helped the dollar rebound, gold bulls need to be careful
June 2 Financial Breakfast: Saudi Arabia may make up for the Russian gap, oil prices plunged more than 3% to a one-week low, the Fed helped the dollar rebound, gold bulls need to be careful
As of 08:48, U.S. crude once fell more than 3%, hitting a new low of $111.64 per barrel in more than a week, mainly because of reports that Saudi Arabia would increase oil supply if Russian production fell. This has greatly eased the crude oil market's concerns about tight supply. At present, the possibility of peaking near the 120 integer mark has increased significantly, and short-term oil prices still have further downside risks. The dollar rose 0.77% overnight to hit a more than one-week high of 102.73, helped by upbeat U.S. economic data and very hawkish comments from several Fed officials.

2022-06-02
7589
At the beginning of the Asian market on Thursday (June 2), U.S. crude oil weakened sharply. As of 08:48, U.S. crude oil once fell by more than 3%, hitting a new low of $111.64 per barrel in more than a week, mainly because of reports that if Russian production falls, Saudi Arabia will increase oil supply. This has greatly eased the crude oil market's concerns about tight supply. At present, the possibility of peaking near the 120 integer mark has increased significantly, and short-term oil prices still have further downside risks. The U.S. dollar index is currently hovering near a more than one-week high, with the greenback rising 0.77% overnight to hit a more than one-week high of 102.73, helped by upbeat U.S. economic data and very hawkish speeches from several Fed officials. Gold prices rebounded from a two-week low on Wednesday, with spot gold hitting a peak of $1,849.88 an ounce and closing at $1,846.20 an ounce. At present, the price of gold is trading around $1847.58. Investors need to beware of the double negative impact of a stronger dollar and falling oil prices on the price of gold. In addition, they need to pay attention to the performance of the US employment data in the evening.
In terms of commodity closings, Brent crude oil futures closed at $116.29 a barrel on Wednesday, up $0.69, or 0.6%; U.S. crude oil futures closed at $115.26 a barrel, up $0.59, or 0.5%. U.S. gold futures close 0.0 higher
2%, settled at $1,848.7 an ounce.
In the U.S. stock market, the Dow Jones Industrial Average fell 176.89 points, or 0.54%, to 32813.23; the S&P 500 fell 30.92 points, or 0.75%, to 4101.23; the Nasdaq lost 86.93 points, or 0.72%, to 11994.46 point.
(A glance at the performance of global stock markets on Wednesday)
The three major U.S. stock indexes ended lower on Wednesday as investors bet the latest economic data would do little to push the Federal Reserve to adjust its aggressive interest rate hikes aimed at curbing inflation.
U.S. job vacancies fell in April but remained at fairly high levels, meaning wages will continue to rise as businesses compete for workers and keeping inflation at an uncomfortably high level for some time.
In addition, U.S. manufacturing activity picked up faster than expected in May as commodity demand remained strong, easing fears that the economy was about to slip into a recession.
Investors also focused on statements from several Fed officials on Wednesday. The U.S. economy grew at a moderate or moderate pace in most Fed regions from April to the end of May, the Fed's Beige Book showed, and there are some early signs that the central bank's actions to reduce demand are starting to take effect.
Still, strategists said they expect the market to trade roughly sideways until inflation slows to the point where investors can really bet on a pause in rate hikes.
“Unless inflation continues to come down, we cannot factor in a pause in rate hikes,” said Mona Mahajan, senior investment strategist at Edward Jones, who will be watching the May jobs report on Friday and inflation next week. data.
Investors have been closely watching economic data for clues on what impact rates may be affected.
"There is nothing in today's data that could lead the Fed to become less aggressive or moderate its hawkish stance in raising rates," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
San Francisco Fed President Daly said she expected to raise interest rates by 50 basis points in each of the next few meetings, bringing rates to 2.5% as soon as possible, as the central bank battles high inflation. [nL4S2XO337] This is in line with Fed Governor Waller’s view on Monday.
JPMorgan Chase CEO Jamie Dimon described the challenges facing the U.S. economy as a "hurricane" coming toward us and urged the Federal Reserve to take strong steps to avoid tipping the U.S. economy into recession.
The Dow Jones Industrial Average fell 176.89 points, or 0.54%, to 32,813.23; the S&P 500 lost 30.92 points, or 0.75%, to 4,101.23; the Nasdaq lost 86.93 points, or 0.72%, to 11,994.46.
Of the S&P 500's 11 major sectors, energy stocks were the only gainers, closing up 1.8 percent as oil prices rose.
The biggest loser was financials, down 1.7%, and the biggest drag on the S&P 500 was healthcare, which closed down 1.4%. The consumer staples sector fell 1.3 percent, while the materials sector <.SPLRCM> and real estate also closed down more than 1 percent.
Uncertainty over Fed policy, the war in Ukraine and long-term supply chain problems caused by the coronavirus lockdowns in Asian powers have all hit stocks, with the benchmark S&P 500 down nearly 14% so far this year.
Janney Montgomery Scott's Luschini said stocks are unlikely to break out to the upside until the market has a clearer picture of inflation and the ability of consumers to continue to digest higher prices and the Fed's actions.
"There's no immediate catalyst for the market to shake off all the fears that have driven the market down to where it is now," he said.
The yield on the 10-year U.S. Treasury note climbed to 2.92%, the highest in two weeks.
Gold prices rebounded from a two-week low on Wednesday, with spot gold hitting a high of $1,849.88 an ounce and closing at $1,846.20 an ounce, after hitting a low of $1,827.80 earlier in the session, the lowest since May 19. Investors turned their attention to safe-haven gold amid fears of rising inflation, mainly driven by higher fuel prices, but gains were limited by a stronger dollar and rising U.S. Treasury yields. U.S. gold futures settled up 0.02% at $1,848.7 an ounce.
Edward Moya, senior analyst at OANDA, said: “Investors now desperately need more safe-haven assets than just U.S. Treasuries, which is why gold has outperformed.”
Oil prices climbed on Wednesday after European Union leaders agreed to impose a phased embargo on some Russian oil.
He added: “Inflation can’t really come down if energy prices don’t come down. So I think the risk of a significant global tightening of monetary policy could really spur gold trading.”
The dollar index rose 0.9%, while U.S. Treasury yields also rose, both benefiting from safe-haven demand.
Investors are also looking ahead to the U.S. nonfarm payrolls report and May inflation data for clues on the economy and the prospect of Fed tightening.
Markets have already priced in a 50 basis point rate hike from the Fed this month and next, but there is uncertainty about what to do after that.
Oil prices settled slightly higher on Wednesday after European Union leaders agreed to a phased ban on imports of Russian oil and the end of a coronavirus lockdown in Asia's Shanghai could boost already tight market demand.
Crude oil contracts have moved steadily higher for weeks as EU and U.S. sanctions cut Russian exports and India and China have limited purchases of Russian crude. Russia is the world's largest exporter of crude oil and fuel.
Brent crude futures settled at $116.29 a barrel, up $0.69, or 0.6%; U.S. crude futures It closed at $115.26 a barrel, up $0.59, or 0.5%.
EU leaders agreed in principle on Monday to cut Russian oil imports by 90 percent by the end of the year, the toughest EU sanctions since Russia's invasion of Ukraine.
“The impact of sanctions coming into effect is huge,” said Bill Farren-Price, director of Enverus in London. “If their sanctions are largely achieved, Russia’s [exports] will be reduced by about 3 million barrels a day, and not all of that oil will be available. It's resold elsewhere, so the impact is pretty huge."
Sanctions on Russian crude oil will be phased in over six months and on refined products over eight months. As a concession to Hungary and two other landlocked countries in Central Europe, the ban exempts Russia from pipeline oil exports.
The idea of suspending Russia's participation in the oil supply deal was not discussed at a technical committee meeting on Wednesday, four OPEC+ sources, which make up the Organization of the Petroleum Exporting Countries (OPEC) and its allies, told Reuters.
However, international oil prices fluctuated and weakened on Thursday, with U.S. crude oil falling more than 3% at one point, hitting a new low of $111.64 per barrel in more than a week, due to reports that Saudi Arabia would increase oil supply if Russian production fell. The market's worries about tight supply have cooled, and the possibility of peaking near the technical short-term 120 mark has increased.
The U.S. dollar index rose 0.77% on Wednesday to hit a more than one-week high of 10.2.73 on Wednesday, helped by upbeat U.S. economic data and very hawkish speeches from several Fed officials, the euro remained under pressure after the euro zone Another record high inflation has raised investor concerns about the region's growth prospects.
The euro fell 0.77% against the dollar on Wednesday, hitting a more than one-week low of 1.0626, extending Tuesday's gains after data released on Wednesday showed U.S. manufacturing activity picked up in May as demand for commodities remained strong, which could ease concerns about the economy Fears of a looming recession.
Separately, the number of job vacancies in the U.S. fell in April, but remains at very high levels.
"While overall job openings and turnover rates remain near record levels, beneath the surface there are clear signs of labor shortages in the hardest-hit industries," Michael Pearce, senior U.S. economist at Capital Economics, said in a note. is easing. This lends some support to the view that normalizing labor market conditions does not necessarily lead to a recession.”
Positive U.S. data put more pressure on the euro, which has been in decline following Tuesday's inflation data, which hit a record high in the euro zone.
"The dollar has edged higher since the long weekend, finding support from rising U.S. Treasury yields and other factors as a safe-haven hedge against worsening global inflation," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Hopes that inflation may have peaked are being challenged by oil prices, which have just posted their sixth straight monthly gain, the longest such streak since 2011.
"Oil holding above $115 does not inspire confidence that inflation has peaked or is close to it," Manimbo said.
European Union leaders agreed in principle on Monday to cut most of Russia's oil imports by the end of the year, the latest news to push prices higher.
The Australian dollar rose as much as 0.7% to hit a nearly four-week high of 0.7229, after data showed the country's economy performed better than expected in the first quarter, with strong domestic demand offsetting the drag from bad weather and an influx of imports. More interest rate hikes aimed at fighting inflation are paving the way. But it came under pressure as the dollar rose, closing at 0.7170, down 0.16%.
The Bank of Canada raised interest rates for the second time in a row by 50 basis points on Wednesday, raising the policy rate to 1.5% from 1.0%, and said it was ready to take "more forceful" action to rein in inflation if necessary, opening the door for more aggressive policy tightening.
The U.S. dollar against the Canadian dollar hit a new low of more than one month at 1.2604 in intraday trading on Wednesday, but followed the dollar's gains in late trading and closed at 1.2655, an increase of about 0.06%.
Sterling fell around 0.9% on Wednesday as investors fretted about a deterioration in Britain's growth outlook after a survey showed British manufacturing activity expanded at the slowest pace since January 2021 in May.
The Fed's most hawkish officials: The current target is to raise interest rates. The interest rate level in 2019 may be used for future reference. ① St. Louis Fed President Bullard urged policymakers to raise interest rates sharply to push the inflation rate off the high of nearly four decades. The long-term outlook is that the current rate hike plan could be partially reversed in the future, it said.
② In late 2019, before the outbreak, the federal funds rate was 1.55%, the 10-year Treasury yield was 1.86%, and mortgage rates were below 4%, Bullard said Wednesday. He believes that "these figures may provide a realistic benchmark for the level of interest rates after inflation is contained".
③ Bullard has been the most hawkish Fed official this year. He supports Chairman Powell in raising interest rates by half a percentage point at the next two meetings and has called for raising interest rates to 3.5%. However, he has also said on a number of recent occasions that rates could fall back in 2023 or 2024 once inflation returns to target.
④ "The current U.S. macroeconomic situation has taken a toll on the Fed's credibility with regard to its anti-inflation target," Bullard said. "This situation is jeopardizing the Fed's credibility in maintaining its inflation target and maintaining price stability."
⑤ He pointed out that prices in financial markets are reflecting the prospect of future Fed rate hikes, which is evidence that relevant guidance has affected market expectations.
Former New York Fed President Dudley: It is expected that the Fed may not suspend interest rate hikes in September ① Former New York Fed President Dudley said the Fed will continue to raise interest rates to curb high inflation. He took a different view on speculation that the Fed will stop raising interest rates in September.
②It said in an interview on Wednesday, “The Fed is very convinced that it needs to quickly adjust interest rates to near neutral. There is an argument that at some point they will stop and watch the situation, of course they will do that at some point in the future. , but it depends on economic data."
San Francisco Fed President: Should keep raising interest rates until inflation slows ① San Francisco Fed President Daly said that the Fed should tighten monetary policy until inflation starts to fall back toward its 2% target. It added that officials should continue to use economic data as their main reference for monetary policy, and that they can slow rate hikes once price growth slows.
② Daly said in an interview on Wednesday: "I'd love to do whatever I can to get the inflation trend down to where we need it to be. What the Fed needs to do, and my personal view of the economy, is to unwind the easing and then be open to the data. attitude and use data as an important reference standard.”
③ Daly said she supports the Fed raising interest rates by 50 basis points each at its June and July meetings, but does not want to predict subsequent policy actions. She supports pushing the federal funds rate to a neutral level of around 2.5% by the end of the year. Daly has no vote on monetary policy this year.
④ Daly said that it may be appropriate to adjust monetary policy to a level that can restrain the US economy, but it is too early to make this decision. Factors such as the reopening of China's economy, the Russian-Ukrainian war and domestic supply and demand imbalances still affect economic growth and prices.
⑤ "I expect supply to pick up a little bit and demand to come back a little bit," Daly said. "If neither of these aspects is going in the desired direction, then we need to implement monetary policy that constrains economic growth."
⑥ Daly said she hoped inflation had peaked, but it was too early to declare victory.
Fed Beige Book: U.S. businesses are starting to feel the effects of Fed tightening
The economy in most of the U.S. Fed regions grew at a moderate or moderate pace from April to the end of May, according to a report released by the U.S. Federal Reserve. There are some early signs that the Fed's actions to reduce demand are starting to take effect. But the latest survey also showed uncertain economic conditions, waning business optimism, heightened fears of a recession, and the prospect of a marked easing of price pressures or labor market tensions in the short term.
The White House said that the supply of rocket systems to Ukraine was not aimed at attacking Russia, but intelligence agencies warned of risks or escalation ① A White House official said that the United States will provide Ukraine with advanced rocket systems for use against Russian troops, but not for use against Russia territory. Washington is now seeking to contain the escalation of the conflict. U.S. President Joe Biden has agreed to provide Ukraine with advanced rocket systems that can precisely hit long-range Russian targets as part of a $700 million weapons aid. Ukraine has pledged not to use long-range missiles against Russian territory, a senior administration official said on Tuesday. Washington has held discussions with Kyiv about the risk of an escalation of the conflict if Ukraine launches an attack into Russia's interior, as the United States and its allies provide Ukraine with increasingly sophisticated weapons, U.S. and diplomatic officials told Reuters.
② Russia accused the United States of adding fuel to the fire by supplying advanced rocket systems to Ukraine, and said it did not believe that Kyiv would not launch these rockets at Russia.
③ Russia said it did not rule out the possibility of a meeting between President Putin and Ukrainian President Volodymyr Zelensky, but any such talks would need to be prepared in advance.
④ The Kremlin warned that EU sanctions on Russian oil would hit global energy markets, but said Moscow could reschedule exports to limit its own losses.
⑤ The Kremlin said the world could be on the brink of a major food crisis, blaming Western countries for "illegal restrictions" imposed on Russia and decisions by Ukrainian authorities.
OPEC+ to stick to small monthly output increase plan this week despite EU embargo on Russian oil
The group is sticking to its small monthly output increase plan this week despite tightening global markets Quickly approaching maximum capacity. OPEC+ will meet on Thursday. OPEC+ is widely expected to raise its July output target by 432,000 bpd. Two OPEC+ sources told Reuters that the idea of suspending Russia's participation in the oil output deal was not discussed at the OPEC+ technical meeting. Six other OPEC+ representatives said the group had not discussed the idea. OPEC+ expects a surplus of 1.4 million bpd in the oil market in 2022, two OPEC+ sources told Reuters, down 500,000 bpd from its previous forecast.
U.S. job vacancies fall in April but remain high, manufacturing activity picks up in May
U.S. job vacancies fall in April, but remain fairly high, meaning wages will continue to rise as businesses compete for workers This has caused inflation to remain uncomfortably high for some time. The U.S. Labor Department's Job Openings and Labor Turnover Survey (JOLTS) showed layoffs fell to a record low, underscoring the tight labor market. Job openings, which measure labor demand, fell by 455,000 to 11.4 million on the last day of April, in line with economists' expectations. A separate report from the Institute for Supply Management (ISM) showed that the index of national manufacturing activity rebounded to 56.1 in April from 55.4 in April.
Bank of Canada hikes rates by 50bps for second straight, says stronger action if needed Curb inflation and open the door to more aggressive policy tightening. The Bank of Canada raised its policy rate to 1.5% from 1.0%, the first two consecutive 50 basis point hikes since it began setting inflation targets in the early 1990s. The central bank also warned that price increases are likely to persist in the short term, so further rate hikes may be required. Bank of Canada Governor Macklem did not rule out raising interest rates by 75 basis points or more to curb inflation. He also said the policy rate could be above the neutral range of 2%-3% for some time if needed.
In terms of commodity closings, Brent crude oil futures closed at $116.29 a barrel on Wednesday, up $0.69, or 0.6%; U.S. crude oil futures closed at $115.26 a barrel, up $0.59, or 0.5%. U.S. gold futures close 0.0 higher
2%, settled at $1,848.7 an ounce.
In the U.S. stock market, the Dow Jones Industrial Average fell 176.89 points, or 0.54%, to 32813.23; the S&P 500 fell 30.92 points, or 0.75%, to 4101.23; the Nasdaq lost 86.93 points, or 0.72%, to 11994.46 point.
Thursday Forward
Major global market conditions
(A glance at the performance of global stock markets on Wednesday)
The three major U.S. stock indexes ended lower on Wednesday as investors bet the latest economic data would do little to push the Federal Reserve to adjust its aggressive interest rate hikes aimed at curbing inflation.
U.S. job vacancies fell in April but remained at fairly high levels, meaning wages will continue to rise as businesses compete for workers and keeping inflation at an uncomfortably high level for some time.
In addition, U.S. manufacturing activity picked up faster than expected in May as commodity demand remained strong, easing fears that the economy was about to slip into a recession.
Investors also focused on statements from several Fed officials on Wednesday. The U.S. economy grew at a moderate or moderate pace in most Fed regions from April to the end of May, the Fed's Beige Book showed, and there are some early signs that the central bank's actions to reduce demand are starting to take effect.
Still, strategists said they expect the market to trade roughly sideways until inflation slows to the point where investors can really bet on a pause in rate hikes.
“Unless inflation continues to come down, we cannot factor in a pause in rate hikes,” said Mona Mahajan, senior investment strategist at Edward Jones, who will be watching the May jobs report on Friday and inflation next week. data.
Investors have been closely watching economic data for clues on what impact rates may be affected.
"There is nothing in today's data that could lead the Fed to become less aggressive or moderate its hawkish stance in raising rates," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
San Francisco Fed President Daly said she expected to raise interest rates by 50 basis points in each of the next few meetings, bringing rates to 2.5% as soon as possible, as the central bank battles high inflation. [nL4S2XO337] This is in line with Fed Governor Waller’s view on Monday.
JPMorgan Chase CEO Jamie Dimon described the challenges facing the U.S. economy as a "hurricane" coming toward us and urged the Federal Reserve to take strong steps to avoid tipping the U.S. economy into recession.
The Dow Jones Industrial Average fell 176.89 points, or 0.54%, to 32,813.23; the S&P 500 lost 30.92 points, or 0.75%, to 4,101.23; the Nasdaq lost 86.93 points, or 0.72%, to 11,994.46.
Of the S&P 500's 11 major sectors, energy stocks were the only gainers, closing up 1.8 percent as oil prices rose.
The biggest loser was financials, down 1.7%, and the biggest drag on the S&P 500 was healthcare, which closed down 1.4%. The consumer staples sector fell 1.3 percent, while the materials sector <.SPLRCM> and real estate also closed down more than 1 percent.
Uncertainty over Fed policy, the war in Ukraine and long-term supply chain problems caused by the coronavirus lockdowns in Asian powers have all hit stocks, with the benchmark S&P 500 down nearly 14% so far this year.
Janney Montgomery Scott's Luschini said stocks are unlikely to break out to the upside until the market has a clearer picture of inflation and the ability of consumers to continue to digest higher prices and the Fed's actions.
"There's no immediate catalyst for the market to shake off all the fears that have driven the market down to where it is now," he said.
The yield on the 10-year U.S. Treasury note climbed to 2.92%, the highest in two weeks.
precious metal
Gold prices rebounded from a two-week low on Wednesday, with spot gold hitting a high of $1,849.88 an ounce and closing at $1,846.20 an ounce, after hitting a low of $1,827.80 earlier in the session, the lowest since May 19. Investors turned their attention to safe-haven gold amid fears of rising inflation, mainly driven by higher fuel prices, but gains were limited by a stronger dollar and rising U.S. Treasury yields. U.S. gold futures settled up 0.02% at $1,848.7 an ounce.
Edward Moya, senior analyst at OANDA, said: “Investors now desperately need more safe-haven assets than just U.S. Treasuries, which is why gold has outperformed.”
Oil prices climbed on Wednesday after European Union leaders agreed to impose a phased embargo on some Russian oil.
He added: “Inflation can’t really come down if energy prices don’t come down. So I think the risk of a significant global tightening of monetary policy could really spur gold trading.”
The dollar index rose 0.9%, while U.S. Treasury yields also rose, both benefiting from safe-haven demand.
Investors are also looking ahead to the U.S. nonfarm payrolls report and May inflation data for clues on the economy and the prospect of Fed tightening.
Markets have already priced in a 50 basis point rate hike from the Fed this month and next, but there is uncertainty about what to do after that.
crude
Oil prices settled slightly higher on Wednesday after European Union leaders agreed to a phased ban on imports of Russian oil and the end of a coronavirus lockdown in Asia's Shanghai could boost already tight market demand.
Crude oil contracts have moved steadily higher for weeks as EU and U.S. sanctions cut Russian exports and India and China have limited purchases of Russian crude. Russia is the world's largest exporter of crude oil and fuel.
Brent crude futures settled at $116.29 a barrel, up $0.69, or 0.6%; U.S. crude futures
EU leaders agreed in principle on Monday to cut Russian oil imports by 90 percent by the end of the year, the toughest EU sanctions since Russia's invasion of Ukraine.
“The impact of sanctions coming into effect is huge,” said Bill Farren-Price, director of Enverus in London. “If their sanctions are largely achieved, Russia’s [exports] will be reduced by about 3 million barrels a day, and not all of that oil will be available. It's resold elsewhere, so the impact is pretty huge."
Sanctions on Russian crude oil will be phased in over six months and on refined products over eight months. As a concession to Hungary and two other landlocked countries in Central Europe, the ban exempts Russia from pipeline oil exports.
The idea of suspending Russia's participation in the oil supply deal was not discussed at a technical committee meeting on Wednesday, four OPEC+ sources, which make up the Organization of the Petroleum Exporting Countries (OPEC) and its allies, told Reuters.
However, international oil prices fluctuated and weakened on Thursday, with U.S. crude oil falling more than 3% at one point, hitting a new low of $111.64 per barrel in more than a week, due to reports that Saudi Arabia would increase oil supply if Russian production fell. The market's worries about tight supply have cooled, and the possibility of peaking near the technical short-term 120 mark has increased.
foreign exchange
The U.S. dollar index rose 0.77% on Wednesday to hit a more than one-week high of 10.2.73 on Wednesday, helped by upbeat U.S. economic data and very hawkish speeches from several Fed officials, the euro remained under pressure after the euro zone Another record high inflation has raised investor concerns about the region's growth prospects.
The euro fell 0.77% against the dollar on Wednesday, hitting a more than one-week low of 1.0626, extending Tuesday's gains after data released on Wednesday showed U.S. manufacturing activity picked up in May as demand for commodities remained strong, which could ease concerns about the economy Fears of a looming recession.
Separately, the number of job vacancies in the U.S. fell in April, but remains at very high levels.
"While overall job openings and turnover rates remain near record levels, beneath the surface there are clear signs of labor shortages in the hardest-hit industries," Michael Pearce, senior U.S. economist at Capital Economics, said in a note. is easing. This lends some support to the view that normalizing labor market conditions does not necessarily lead to a recession.”
Positive U.S. data put more pressure on the euro, which has been in decline following Tuesday's inflation data, which hit a record high in the euro zone.
"The dollar has edged higher since the long weekend, finding support from rising U.S. Treasury yields and other factors as a safe-haven hedge against worsening global inflation," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Hopes that inflation may have peaked are being challenged by oil prices, which have just posted their sixth straight monthly gain, the longest such streak since 2011.
"Oil holding above $115 does not inspire confidence that inflation has peaked or is close to it," Manimbo said.
European Union leaders agreed in principle on Monday to cut most of Russia's oil imports by the end of the year, the latest news to push prices higher.
The Australian dollar rose as much as 0.7% to hit a nearly four-week high of 0.7229, after data showed the country's economy performed better than expected in the first quarter, with strong domestic demand offsetting the drag from bad weather and an influx of imports. More interest rate hikes aimed at fighting inflation are paving the way. But it came under pressure as the dollar rose, closing at 0.7170, down 0.16%.
The Bank of Canada raised interest rates for the second time in a row by 50 basis points on Wednesday, raising the policy rate to 1.5% from 1.0%, and said it was ready to take "more forceful" action to rein in inflation if necessary, opening the door for more aggressive policy tightening.
The U.S. dollar against the Canadian dollar hit a new low of more than one month at 1.2604 in intraday trading on Wednesday, but followed the dollar's gains in late trading and closed at 1.2655, an increase of about 0.06%.
Sterling fell around 0.9% on Wednesday as investors fretted about a deterioration in Britain's growth outlook after a survey showed British manufacturing activity expanded at the slowest pace since January 2021 in May.
international news
The Fed's most hawkish officials: The current target is to raise interest rates. The interest rate level in 2019 may be used for future reference. ① St. Louis Fed President Bullard urged policymakers to raise interest rates sharply to push the inflation rate off the high of nearly four decades. The long-term outlook is that the current rate hike plan could be partially reversed in the future, it said.
② In late 2019, before the outbreak, the federal funds rate was 1.55%, the 10-year Treasury yield was 1.86%, and mortgage rates were below 4%, Bullard said Wednesday. He believes that "these figures may provide a realistic benchmark for the level of interest rates after inflation is contained".
③ Bullard has been the most hawkish Fed official this year. He supports Chairman Powell in raising interest rates by half a percentage point at the next two meetings and has called for raising interest rates to 3.5%. However, he has also said on a number of recent occasions that rates could fall back in 2023 or 2024 once inflation returns to target.
④ "The current U.S. macroeconomic situation has taken a toll on the Fed's credibility with regard to its anti-inflation target," Bullard said. "This situation is jeopardizing the Fed's credibility in maintaining its inflation target and maintaining price stability."
⑤ He pointed out that prices in financial markets are reflecting the prospect of future Fed rate hikes, which is evidence that relevant guidance has affected market expectations.
Former New York Fed President Dudley: It is expected that the Fed may not suspend interest rate hikes in September ① Former New York Fed President Dudley said the Fed will continue to raise interest rates to curb high inflation. He took a different view on speculation that the Fed will stop raising interest rates in September.
②It said in an interview on Wednesday, “The Fed is very convinced that it needs to quickly adjust interest rates to near neutral. There is an argument that at some point they will stop and watch the situation, of course they will do that at some point in the future. , but it depends on economic data."
San Francisco Fed President: Should keep raising interest rates until inflation slows ① San Francisco Fed President Daly said that the Fed should tighten monetary policy until inflation starts to fall back toward its 2% target. It added that officials should continue to use economic data as their main reference for monetary policy, and that they can slow rate hikes once price growth slows.
② Daly said in an interview on Wednesday: "I'd love to do whatever I can to get the inflation trend down to where we need it to be. What the Fed needs to do, and my personal view of the economy, is to unwind the easing and then be open to the data. attitude and use data as an important reference standard.”
③ Daly said she supports the Fed raising interest rates by 50 basis points each at its June and July meetings, but does not want to predict subsequent policy actions. She supports pushing the federal funds rate to a neutral level of around 2.5% by the end of the year. Daly has no vote on monetary policy this year.
④ Daly said that it may be appropriate to adjust monetary policy to a level that can restrain the US economy, but it is too early to make this decision. Factors such as the reopening of China's economy, the Russian-Ukrainian war and domestic supply and demand imbalances still affect economic growth and prices.
⑤ "I expect supply to pick up a little bit and demand to come back a little bit," Daly said. "If neither of these aspects is going in the desired direction, then we need to implement monetary policy that constrains economic growth."
⑥ Daly said she hoped inflation had peaked, but it was too early to declare victory.
Fed Beige Book: U.S. businesses are starting to feel the effects of Fed tightening
The economy in most of the U.S. Fed regions grew at a moderate or moderate pace from April to the end of May, according to a report released by the U.S. Federal Reserve. There are some early signs that the Fed's actions to reduce demand are starting to take effect. But the latest survey also showed uncertain economic conditions, waning business optimism, heightened fears of a recession, and the prospect of a marked easing of price pressures or labor market tensions in the short term.
The White House said that the supply of rocket systems to Ukraine was not aimed at attacking Russia, but intelligence agencies warned of risks or escalation ① A White House official said that the United States will provide Ukraine with advanced rocket systems for use against Russian troops, but not for use against Russia territory. Washington is now seeking to contain the escalation of the conflict. U.S. President Joe Biden has agreed to provide Ukraine with advanced rocket systems that can precisely hit long-range Russian targets as part of a $700 million weapons aid. Ukraine has pledged not to use long-range missiles against Russian territory, a senior administration official said on Tuesday. Washington has held discussions with Kyiv about the risk of an escalation of the conflict if Ukraine launches an attack into Russia's interior, as the United States and its allies provide Ukraine with increasingly sophisticated weapons, U.S. and diplomatic officials told Reuters.
② Russia accused the United States of adding fuel to the fire by supplying advanced rocket systems to Ukraine, and said it did not believe that Kyiv would not launch these rockets at Russia.
③ Russia said it did not rule out the possibility of a meeting between President Putin and Ukrainian President Volodymyr Zelensky, but any such talks would need to be prepared in advance.
④ The Kremlin warned that EU sanctions on Russian oil would hit global energy markets, but said Moscow could reschedule exports to limit its own losses.
⑤ The Kremlin said the world could be on the brink of a major food crisis, blaming Western countries for "illegal restrictions" imposed on Russia and decisions by Ukrainian authorities.
OPEC+ to stick to small monthly output increase plan this week despite EU embargo on Russian oil
The group is sticking to its small monthly output increase plan this week despite tightening global markets Quickly approaching maximum capacity. OPEC+ will meet on Thursday. OPEC+ is widely expected to raise its July output target by 432,000 bpd. Two OPEC+ sources told Reuters that the idea of suspending Russia's participation in the oil output deal was not discussed at the OPEC+ technical meeting. Six other OPEC+ representatives said the group had not discussed the idea. OPEC+ expects a surplus of 1.4 million bpd in the oil market in 2022, two OPEC+ sources told Reuters, down 500,000 bpd from its previous forecast.
U.S. job vacancies fall in April but remain high, manufacturing activity picks up in May
U.S. job vacancies fall in April, but remain fairly high, meaning wages will continue to rise as businesses compete for workers This has caused inflation to remain uncomfortably high for some time. The U.S. Labor Department's Job Openings and Labor Turnover Survey (JOLTS) showed layoffs fell to a record low, underscoring the tight labor market. Job openings, which measure labor demand, fell by 455,000 to 11.4 million on the last day of April, in line with economists' expectations. A separate report from the Institute for Supply Management (ISM) showed that the index of national manufacturing activity rebounded to 56.1 in April from 55.4 in April.
Bank of Canada hikes rates by 50bps for second straight, says stronger action if needed Curb inflation and open the door to more aggressive policy tightening. The Bank of Canada raised its policy rate to 1.5% from 1.0%, the first two consecutive 50 basis point hikes since it began setting inflation targets in the early 1990s. The central bank also warned that price increases are likely to persist in the short term, so further rate hikes may be required. Bank of Canada Governor Macklem did not rule out raising interest rates by 75 basis points or more to curb inflation. He also said the policy rate could be above the neutral range of 2%-3% for some time if needed.
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