Jerome Powell, the Federal Reserve Governor who is a voting member of the USA central bank’s rate-setting committee, said during a speech in Washington that he did feel the country’s economy was on a “solid footing” allowing the Fed to reach its inflation and employment targets.
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NEW YORK, May 27 The U.S. dollar and world stock indexes edged higher on Friday ahead of a speech by Federal Reserve Chair Janet Yellen that could provide new signals on the timing of a U.S. interest rate hike.
In a moderated discussion at Harvard University, Dr Yellen said the USA economy was improving after a weak performance in the first quarter and at the end of previous year.
“We’re waiting for Yellen tonight and then there’s a whole raft of numbers in Australia next week”, she said. For those keeping track, the event is being billed as a “conversation” with Harvard’s Greg Mankiw, an economics professor.
“With the risks from “Brexit” receding before our eyes, a mid-June hike from the Fed may actually be far higher than the 29 percent probability the market is now giving it”, he said in an email.
The Foreign Exchange Rates of major currencies will be updated twice each working day at around 8:30am and 3:30pm.
The yield spread between short- and long-dated Treasuries narrowed in reaction to Yellen’s rate-hike comment as traders favored longer maturities over shorter ones in anticipation that the Fed may raise rates as early as June. Investors will watch for any hints she may offer about a possible interest-rate increase at the Fed’s meetings in June or July.
The blue chip Dow Jones Industrial Average gained 0.25 per cent to 17,873.22, the broader S&P 500 rose 0.43 per cent to 2,099.06, with both indexes rising more than 2 per cent for the week.
US stock index futures indicated a narrowly higher open on Friday morning as traders eyed a revision of first-quarter GDP (gross domestic product) as well as consumer sentiment ahead of the Memorial Day long weekend. In Asia, Japan’s Nikkei (Nihon Kenzai Shinbun:.N225)closed 0.37 percent higher on Friday.
However, the lack of improvement in pricing odds is an affront to recent economic data momentum: the Citi Economic Surprise Index for the United States just hit its highest level (-20.4) in over a month (-21.9 on April 18); and the Atlanta Fed’s GDPNow Q2’16 growth forecast has improved to +2.9% SAAR.
The University of Michigan Consumer Sentiment Index gained 5.7 points to 94.7, its highest level since June 2015. These may damage emerging economies where many companies borrow in dollars and knock down the price of some commodities, risking a repeat of the market rout seen after the Fed’s first post-crisis rate hike in December. Durable goods orders, retail sales, housing construction and weak inflation have strengthened.
Goldman Sachs is forecasting second quarter GDP to rebound to 3 per cent.
Indexes: Germany’s DAX 30 lost 0.1% at 10,258.75, and France’s CAC 40 fell 0.2% to 4,503.96.
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