Fed's Bostic: Rates may need to be raised higher than previously expected
The central bank may need to raise borrowing costs more than previously expected given the unexpectedly strong job growth in January, Atlanta Fed President Bostic said on Monday.
Unless the report turns out to be anomalous, "it could mean we have to do more," Bostick said. "And I expect that to translate into higher interest rates than I'm currently forecasting."
San Francisco Fed report: U.S. financial conditions may tighten further
U.S. stocks could fall further and Treasury yields could rise as the central bank continues its current round of rate hikes in the coming months, according to an analysis published Monday by the San Francisco Fed.
Financial conditions tightened markedly even before the central bank started raising interest rates last March to combat inflation at 40-year highs, as investors anticipated the Fed's actions.
Treasury Secretary Yellen: No U.S. Recession When Unemployment Is At 53-Year Low
U.S. Treasury Secretary Janet Yellen said on Monday that she expects the U.S. economy to be on a path to avoid recession, with inflation falling sharply and the economy remaining strong, given the strength of the U.S. labor market.
Yellen said on ABC's "Good Morning America," "When you have 500,000 new jobs and the lowest unemployment rate in over 50 years, you don't have a recession and what I see is A path where inflation falls sharply while the economy remains strong."
Inflation is still too high, Yellen said, but it has been falling for the past six months and will fall significantly in the future given the measures taken by the Biden administration, including moves to lower the cost of gasoline and prescription drugs.
Goldman Sachs Cuts U.S. Recession Chance to 25% in Next 12 Months on Strong Labor Market
Goldman Sachs said on Monday it now sees a 25% chance of the U.S. entering a recession within the next 12 months, down from its previous forecast of 35%.
"Continued strength in the labor market and early signs of improvement in business surveys suggest that risks of a near-term downturn have significantly diminished," the bank said in a research note.
Economists polled by Reuters in December put the chance of a recession in 2023 at 60%.
Dollar extends rally on strong data on Monday
On Monday, the U.S. dollar index continued last week’s gains, reaching as high as 103.76, a new high in nearly four weeks, and closing at 103.64, an increase of about 0.62%. Possibility of rate hikes to combat inflation.
U.S. Treasury yields hit a four-week high on Monday, with the Fed expected to raise interest rates above 5%
The yield on the 10-year U.S. Treasury note hit a four-week high on Monday after a blowout jobs number boosted expectations that the Federal Reserve's rate hikes won't end with a hard landing for the economy and that there could be more than one more rate hike from the Fed. Last Friday's ISM non-manufacturing PMI data was also very strong.
"It's been a big rally in the (ISM) that takes away some of the concerns about December weakness," said Jim Vogel, senior rates strategist at FHN Financial in New York. Meanwhile, investors are eyeing the jobs report, expecting a "big improvement in January," has "translated into the inflation data that we will see very soon".
Chief Economist Peel: BoE willing to do more on inflation if necessary
The Bank of England's chief economist Peel said on Monday that the Bank of England is willing to do more to bring inflation back to target. The bank had said last week that interest rates were near their peak.
"I do have a high level of confidence (in getting inflation on target) because we know what we're going to do. We've done a lot to get there and we're prepared to do more if necessary to make sure we can Continuing to make that happen," Peele said in an online question-and-answer session, "and I don't think anyone has changed their minds, or lost confidence, or anything like that."
UK headline inflation fell to 10.5% in December after hitting a 41-year high of 11.1% in October.
The Bank of England raised interest rates for the 10th time in a row last week, but dropped language that it was prepared to raise borrowing costs "robustly" if necessary.
TREX Global’s view:There is callback pressure on the U.S. dollar in the short term, which is expected to provide some opportunities for gold prices to rebound and adjust. However, current market expectations have changed. The market has higher expectations for the Fed's terminal interest rate and may maintain high interest rates for a longer period of time. The market's expectations of a U.S. recession have also cooled, which will limit the room for a correction in the U.S. dollar and put further downward pressure on the gold price in the market outlook. Central banks in developed countries such as the European Central Bank and the Bank of England are also facing further pressure to raise interest rates, which will increase holdings. There is an opportunity cost of gold, which is not good for gold prices.
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