Two-year treasury yield dropped by 5 bps with the Dollar pulled back by 0.2%, falling for the third day – US futures indicated meager gains.
Investors are divided on the Fed hinging on policy easing. The US producer price index slightly caught up in August following the lowered numbers in July. Concerns about the weakening labor market were reconsidered based on increasing unemployment benefits applications.
William Dudley, former President of the New York Fed, spoke at a forum in Singapore, predicting a scope for 0.5 percentage point rate cut at the meeting in the coming week. Traders are betting on 33 bps cuts on September 18 against the 31 bps and 26 bps on Thursday and Wednesday, respectively.
“The possibility of a 50 basis point cut will keep the US Dollar heavy in the meantime,” said Carol Kong, a currency strategist at the Commonwealth Bank of Australia.
Wholesale inflation data on Thursday heeded the consumer price index, depicting an underlying inflation. Policymakers nonetheless clarified that they are zeroed in on the soft labor market which would seemingly be driving the discussions in the following months.
Christopher Larkin of Morgan Stanley believed the Fed will initiate a rate-cutting cycle due to the PPI replicating the CPI reading and unemployment claims in tandem with expectations, saying “the markets are anticipating an initial 25 bps cut.”
As the Yen swelled in Japan to roughly 141 per $1, stocks fell with the possibility of shrunken competitiveness of the export economy. Central bank watchers are anticipating the next rate hike in December, surveyed Bloomberg.
The US oil price was on a higher fringe following over 2% rise during the West Texas Intermediate on Thursday – result of the storm Francine hitting the Gulf of Mexico. Gold has seen a record increase relatively due to the decline of the Dollar.
Some of the important moves in the market include 0.3% rise in the Stoxx 600, 0.4% rise in the MSCI Asia Pacific Index, and 0.5% rise in the MSCI Emerging Markets Index; Bloomberg Dollar Spot Index fell by 0.2%, Japanese Yen rose by 0.5%, and the offshore Yuan rose by 0.2%; Bitcoin and Ether experienced a 0.7% and 0.5% fall, respectively.
In terms of 10-year bond yields, Treasuries declined by 3 bps to 3.64%, German declined by 2 bps to 2.13%, and British declined by 3 bps to 3.76%; commodities-wise, BRENT crude rose by 0.6% to $72.38 per barrel, while Spot gold rose by 0.4% to $2,567.38 per ounce.
