Skip to main content

US bonds to its lowest level.

US bonds

US stocks and government bonds surged after consumer price inflation fell more than expected in November to its lowest level in almost a year, bolstering the Federal Reserve’s plans to slow the pace of interest rate rises.
The rate of increase in the consumer price index fell to 7.1 per cent last month, lower than the 7.3 per cent forecast by economists and down from 7.7 per cent in October. It was the lowest level since December 2021.
Overall CPI rose 0.1 per cent from the previous month, less than the 0.4 per cent increase in October.
«We could see setbacks along the way. But what is clear is my economic plan is working and we’re just getting started. My goal is simple: get price increases under control without choking off economic growth».
By late-morning trading, the S&P 500 was up 1.5 per cent and the Nasdaq Composite more than 2 per cent, as investors bet that the US central bank might not have to squeeze the economy as aggressively as feared to bring inflation under control. The yield on two-year US Treasury bonds, which is sensitive to changes in interest rate expectations, slid 0.22 percentage points to 4.18 per cent at one point, as the price increased. The Fed is set to raise its benchmark policy rate by half a percentage point today, breaking successive 0.75-point interest rate increases.
With the expected rise, the federal funds rate will move up to a new target range of 4.25 to 4.5 per cent, which most officials believe is still not high enough to bring inflation down to the Fed’s longstanding 2 per cent target.
«One number won’t be enough for the Fed, but it certainly is going to put in a better mood,» said Padhraic Garvey, regional head of research for the Americas at ING.

www.sba.tax 

Labels:

Comments

  1. Anonymous14 December 2022 at 16:56

    I also think the US central bank may not have to squeeze the economy as hard as it was feared. The US economy is strong and it might return to its former glory earlier (and stronger) than expected.

    ReplyDelete

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more

Tariffs on UK electric cars.

  The European Commission has confirmed that it will continue with its plan to impose tariffs on electric cars exported between the UK and EU starting next year. This is due to the "rules of origin" requirement that mandates EVs traded across the English Channel to have 60% of their battery and 45% of their parts sourced from the EU or UK or face a 10% tariff. A senior Commission official, Richard Szostak, recently informed parliamentarians from the UK and EU that the bloc's battery investment has significantly declined, making the tariffs necessary to encourage domestic production. In 2022, the EU's share of global investment in battery production shrank from 41% to only 2% after the US offered substantial subsidies through its Inflation Reduction Act. Starting in 2024, car manufacturers in the UK will need to have 22% of their sales come from zero-emission vehicles, which means they may need to import EVs from the continent to meet this requirement. If EU carmakers ...
Post a Comment
Read more