While the inflation data announced last week strengthens the predictions that the Fed will be successful in its fight against inflation, it seems that the risk appetite in the markets has increased.
On the other hand, although it is noteworthy that Fed officials still maintain their cautious attitude, it is estimated that the bank may start reducing interest rates as of June next year, based on the pricing in the money markets.
THE ECONOMY HAS BEEN REBALANCED
While the Fed’s Deputy Chairman for Supervision, Michael Barr, stated that interest rates are at or close to the peak point they should be, Boston Fed President Susan Collins stated that the inflation news is promising and said that the economy is rebalancing.
Emphasizing that additional tightening is not off the table, Collins said it is too early to declare victory against high inflation.
San Francisco Fed President Mary Daly pointed out that she was not sure whether inflation was heading towards 2 percent and argued that the Fed should be patient and resist the pressure to act quickly.
DOLLAR CONTINUES TO DECLINE
Chicago Fed President Austan Goolsbee stated that there is a gap between the data and the opinions of consumers and businesses about the economy, and noted that although inflation has improved, it is still high.
On the other hand, although the data announced on Friday in the country indicates that the housing market remains strong, the dollar continues to decline against other developed currencies.
While the dollar index dropped to its lowest level since September 1 at 103.5, it is being monitored whether the buying-oriented trend followed in the bond markets last week will continue.
While the US 10-year bond interest rate stabilized at 4.45 percent on the first trading day of the new week, volatility in the bond markets is expected to increase depending on the demand for 20-year bonds in the US bond issuance.
BRENT OIL IS AT THE LEVEL OF 81 DOLLARS
While the ounce price of gold starts the week at $1,981 with a 0.2 percent increase, the barrel price of Brent oil finds buyers at $81.2 with a 0.9 percent gain in value.
With these developments, the Nasdaq index increased by 0.08 percent, the S&P 500 index increased by 0.13 percent and the Dow Jones index increased by 0.01 percent in the New York Stock Exchange on Friday. Index futures contracts in the USA started the new week with a horizontal trend.
While the upward trend in European stock markets came to the fore on Friday, European Central Bank (ECB) President Christine Lagarde stated that there are increasing signs that the global economy is divided into rival blocks and said, “Europe is now at a critical juncture and faces a number of common challenges such as deglobalization, demography and decarbonization.” said.
Lagarde said, “Dealing with these challenges simultaneously requires a generational effort and large investments in a short time.”
Dave Ramsden, Deputy Governor of the Bank of England (BoE), emphasized at the Society of Professional Economists Annual Meeting that the Bank of England should keep interest rates at “restrictive” levels for a while in order to reduce inflation to the bank’s target of 2 percent.
On Friday, the DAX 40 index in Germany increased by 0.84 percent, the CAC 40 index in France increased by 0.91 percent, the FTSE 100 index in the UK increased by 1.26 percent and the MIB 30 index in Italy increased by 0.82 percent. Index futures contracts in Europe started the new week with a buying-oriented trend.
While Asian markets started the week with a buying trend, Japan’s Nikkei 225 index gave back its gains with increased profit sales after testing the peak of the last 33 years.
While the Central Bank of China (PBoC) left the 1- and 5-year borrowing rates constant at 3.45 percent and 4.20 percent, respectively, the ongoing concerns about the country’s economy continue to dampen the upward movement in the stock markets.
Near the close, the Nikkei 225 index in Japan decreased by 0.3 percent, the Shanghai composite index in China gained 0.5 percent, the Hang Seng index in Hong Kong gained 1.8 percent and the Kospi index in South Korea gained 1.1 percent. .