While some investors had speculated that the Fed’s Brainard would switch over to the more hawkish camp, she said Monday she wanted to see a stronger trend in USA consumer spending and evidence of rising inflation before the Fed raises rates, and that the United States still looked vulnerable to economic weakness overseas.
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CURRENCIES: The dollar rose to 102.31 yen from 101.84 yen.
“We’re still going to be in an environment where rates in the U.S. are still very low”, David Mazza, the head of ETF and mutual-fund research at State Street Global Advisors, which manages SPDR ETFs, said in an interview with Bloomberg. Brainard, considered a Fed “dove”, or someone that favors a cautious approach to rate hikes, remained true to form suggesting that a preemptive hike in short-term interest rates is “less compelling”. The International Energy Agency said it expects slower growth in demand for oil this year.
OIL: Benchmark U.S. crude fell 45 cents to $45.85 per barrel in NY. Brent crude, the benchmark for global oil prices, inched up 16 cents to $47.26 a barrel in London. Oil prices are being pushed lower by both a stronger dollar, and two reports that see the global oil glut lasting longer than expected. The Standard & Poor’s 500 index fell 23 points, or 1 percent, to 2,136. This surprised traders because many thought she would offer hawkish commentary.
On Friday, investors were rattled by comments from Federal Reserve Bank of Boston president Eric Rosengren that raised expecations for a possible rate hike when the Fed concludes its two-day meeting on September 21.
Minneapolis Fed President Neel Kashkari said “politics does not play a part” in the Fed’s deliberations and that current low US inflation means there is no “huge urgency” to hike.
Germany’s DAX gained 0.2 percent to 10,448.79 while the CAC 40 of France added 0.1 percent to 4,445.97.
The U.K. Office for National Statistics said on Tuesday that the consumer price index came in at an annualized rate of 0.6% last month, compared to expectations for a 0.7% rise.
Retail sales advanced 10.6 percent from a year earlier – again exceeding expectations for 10.2 percent, and fixed-asset investment growth was unchanged at 8.1 percent in the January-August period in an encouraging sign for the world’s second-largest economy.
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Japan’s Nikkei 225 gained 0.2 percent to 16,704.94 and South Korea’s Kospi rose 0.6 percent to 2,002.42. Verizon shed $1.12, or 2.1 percent, to $51.45 and AT&T fell 74 cents, or 1.8 percent, to $39.97. Hong Kong’s Hang Seng inched up almost 0.2 percent to 23,254.03. At 0730 GMT, the euro traded at $1.1221. The Shanghai Composite index fell 0.2 percent and markets in Southeast Asia were mostly lower. The GBP/USD was down 0.43% at $1.3272, with the daily price ranging from $1.3277 to a peak of $1.3342.
