Surprisingly strong data on USA new home sales in April supported the view the economy may be strong enough for the Fed to raise interest rates as early as June.
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The auction followed a clear signal by the Federal Reserve last Wednesday, which caught many investors off guard, that an interest rate increase is likely next month if the economy keeps improving.
It is the second consecutive meeting at which the Kansas City and Richmond regional banks have pushed for an increase in the discount rate.
In a repetition of remarks made in recent months, Philadelphia Fed president Patrick Harker said he expects United States rates to move “meaningfully” away from near zero in the second half of 2016.
Dallas Fed President Robert Kaplan on Wednesday said he would support raising interest rates in the “near future”, though a vote by Britain on whether to leave the European Union will weigh on any Fed rate decision in June. Most Fed officials believe they’ll raise rates at least two times this year and a meeting on interest rates in June looms.
Gold fell to the lowest in more than four weeks on Tuesday as hawkish comments from Federal Reserve officials in the previous session sent the dollar to a two-month high against a currency basket.
Downgrades to the outlook for foreign economic growth and the deterioration of credit quality in the USA energy sector from the slump in oil prices a year ago led to wider credit spreads, Marco Del Negro, Marc Giannoni and Micah Smith said in the post.
Gold capped the longest slump in more than two months, falling for a fourth day as renewed speculation over the USA rate outlook dimmed demand for precious metals.
WALL STREET: The Dow Jones industrial average fell 8.01 points, or 0.05 percent, to 17,492.93.
Shares across Asia rose Wednesday as oil prices advanced to their highest levels in more than seven months, while investors appeared to be more upbeat about the prospect of a USA interest-rate increase after the release of strong economic data there.
Investors will watch Fed Chair Janet Yellen’s appearance at a panel at Harvard University on Friday, the same day as they take in a revised estimate of US first-quarter growth. The yield on the 10-year Treasury note rose to 1.85 percent from 1.84 percent.
Coming after a raft of positive USA data and comments from various Fed officials explicitly highlighting a chance of a Fed rate hike in June or July, the data helped to cement the case for a rate hike in coming months.
Lele said he expected the Fed to hike rates in June or July, and then again in December, and was bullish on the US dollar.
Brent futures was up 61 cents at $48.96 a barrel, while USA crude futures rose 71 cents to $48.79.
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Gold XAU= also hit a six-week low of $1,226.50 per ounce on Tuesday and last stood at $1,227.60.
