Major indices recovered by mid-afternoon ahead of next week’s Federal Reserve Board meeting.of Wall Street’s fear index, the VIX, fell to the 16 mark. This is the lowest level seen in almost two years and suggests that traders have little concern.
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US economic data showed income growth in March at a moderately strong pace, but consumers were somewhat cautious in a tough month focused on bank failures. U.S. economic data reflect stubborn wage inflation, with the Fed’s favorite inflation indicator, Personal Consumer Expenditure (PCE), falling below his March core of his inflation rate when energy prices were falling. Demonstrated tenacity.
US employment cost data showed higher than expected wage inflation in the first quarter and urged the Fed to stick to its plan of at least one rate hike at next week’s meeting. increase.
The Federal Reserve has repeatedly said its main concern now is wage inflation and the consequences of pivoting too soon before it is brought under control. We expect the Fed to cut rates several times. This contrasts with what the Fed has said at previous meetings, but will see if it remains consistent again next week.
Indexes Rise, VIX Hits New Lows
- At the time of writing, the S&P 500 and NASDAQ indices were up 0.6% and 0.4% respectively to 4,158 and 12,184.
- Wall Street’s fear index, the VIX, fell to the 16 mark, the lowest level seen in almost two years – markets appear to be pricing little risk
- Dollar Index Unchanged at 101.6, Key Cross Rates Flat
- Yields on 2-year and 10-year government bonds fell again to 4.05% and 3.45% respectively.
Oil rises, gold stays the same
- Gold prices were unchanged again at the 2,000 per ounce mark
- Oil prices recovered from recent weakness, rising 2.7% to $76.7 a barrel
- Grain and oilseed markets struggled to sustain last night’s gains with volatile Kansas City wheat trading.
Income Rise, Spending Contained, Consumer Inflation Moderate
- Personal income rose 0.3% month-on-month in March, beating analysts’ expectations, with growth slowing to 0.2% over the period, in line with the previous month.
- Consumer spending in March was flat month-on-month, in line with analyst expectations. The February figure was revised from his originally reported 0.2% gain to 0.1%.
- The PCE consumer price index rose 0.1% month-on-month in March, in line with analyst expectations, down from 0.3% in February.
- The PCE price index rose 4.2% y/y in March, also in line with analyst expectations, but down from 5.1% y/y inflation the previous month.
- The core PCE price index, which excludes the volatile food and energy sectors, rose 0.3% month-on-month, in line with analyst expectations and in line with last month’s inflation rate.
- Core PCE rose 4.6% year-on-year in March, slightly above expectations but down from 4.7% the previous month.
Employment costs continue to rise
- The U.S. Labor Cost Index rose 1.2% quarter-on-quarter in the first quarter, beating analysts’ expectations of 1.0% growth, and fourth-quarter growth was 1.1%, up from initially reported growth of 1.0%. corrected to %.
- Still, the year-over-year growth rate in hiring costs increased by 4.8% from 5.1% in the previous quarter. This is because we are working on a higher base than we were a year ago as wages picked up momentum.
Chicago PMI beats expectations
- Chicago’s PMI beat expectations for April, but was still in moderate contraction territory.
- Chicago’s latest consumer sentiment data matched preliminary data previously reported
Chinese holiday tests rebound papers
- China will be closed tomorrow until Wednesday to celebrate its annual Labor Day holiday
- Holiday spending will be interesting, as we have yet to see Chinese consumers comfortable enough to spend more on big-ticket items.
- Early signs suggest China will take a record number of trips per week. Popular tourist destinations are sold out.The country’s rail and air systems expect record passenger numbers
Poland is not ready to admit Ukrainian grain
- Poland reports that a deal to allow Ukrainian grain to pass through the country has not yet been completed and there are several obstacles to overcome
- This is due to more challenges for expanding the “Safe Corridor” initiative with Russia due to the export of water from three Ukrainian ports.
- Current perception is that demand will be weak in 2023, but production will be good, leading to oversupply and lower prices.
- Grain and oilseed prices have risen moderately following yesterday’s decline.
Analysis by Chief Commodity Economist Alan Suderman
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