Wall Street indices interacted with the inflation data released a while ago, as they are witnessing a collective rise in conjunction with the start of today’s session.
Data released showed inflation slowing in March, boosting hopes that the Federal Reserve will slow the pace of monetary tightening.
However, today’s session witnessed severe fluctuations in gold prices due to the Federal Reserve’s statements issued a while ago and the change in interest expectations, as it was without a specific destination, but it is in a downward range now.
Statement from the Federal Reserve recently
Boston Fed President Susan Collins said there was “more work to be done” to bring down inflation and that while it was “probable that we will see at least some” credit tightening as a result of the recent banking turmoil, it will be important to watch the data.
“What history has told us is that you need conditions tight enough to suppress inflation, and that the Fed has to stay the course and not back down,” Collins said in an interview Friday on Bloomberg Television.
Collins, who does not have the right to vote on monetary policy decisions this year, said on Thursday that more monetary tightening is needed to bring down inflation. She said the average forecast Fed officials provided in March was a good gauge of what she expected interest rates and the economy to be.
Recently released data
Consumer confidence in the United States declined by more than preliminary estimates this month, with concerns about the prospects of a recession.
Michigan data revealed that the consumer confidence index reached 62 points in the revised reading for the month of March, compared to 67 points in February, and compared to preliminary estimates at 63.4 points.
The current economic situation index declined to 66.3 points from 70.7 points, and the future expectations index decreased from 64.7 points to 59.2 points.
Inflation expectations over the next year fell from 4.1% in February to 3.6% this month, the lowest level since April 2021.
The annual basic personal consumption expenditures price index recorded an increase of 4.6%, while experts expected it to rise by 4.7%, while it recorded 4.7% in the previous reading. The Fed aims to drop this number to 2% only.
The core personal consumption expenditures price index rose on a monthly basis to 0.3%, after recording 0.5% last month, while experts had expected an increase of 0.4%.
As for the main personal consumption expenditures price index, on an annual basis, it increased by 5%, and it had recorded, in the last reading, an increase of 5.3%. On a monthly basis, it recorded 0.3%, less than expectations that expected it to rise by 0.5%.
Slow containment of inflation
HSBC confirmed that central banks around the world aggressively raised interest rates in an attempt to rein in inflation, after a decade of accommodative financial conditions, which meant that policy makers were slow to contain inflation over the past two years.
The bank continued: “The length of the period of quantitative easing – it has become similar to the nationalization of the bond market – has benefited the economies trying to recover from the financial crisis of 2008, but the length of the period means the accumulation of government debt.”
The nationalization of bond markets means that central banks buy government bonds in large quantities within the framework of the accommodative monetary policy, which reduces the role of private investment in the bond market.
He added: “When realizing the penetration of the problem of inflation in the economy, and starting to raise the interest rate very quickly as a reaction, as happened over the past two years, many speculations about the development of prices of financial instruments fail, and with it the crisis occurs.”
Indicators at the time of writing
The Dow Jones Industrial Average rose 0.5 percent to 33,041.96 points.
The Standard & Poor’s 500 Index rose by 0.63 percent, at 4,077.18 points.
The Nasdaq Composite Index rose 0.85 percent to 12,113.54 points at the open.
Markets at the time of writing
Gold fell in spot transactions by 0.15% at $1977 an ounce.
While US gold futures fell 0.18% to 1994 dollars.
The dollar index rose 0.3%, to record 102.1 points.
Brent crude futures rose by 0.1%, to $78.6 a barrel.
The US West Texas Intermediate crude price rose by 0.2%, at $74.5 a barrel.
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