The Labor Department released a report on Friday showing an unexpected decrease in USA producer prices in the month of October. Job openings rose to a seasonally adjusted 5.53 million from 5.38 million in August, though that’s short of the 5.67 million peak reached this summer.
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Silver for December delivery lost 0.035 or 0.25% to close at 14.190 an ounce.
The index measures prices from the perspective of the seller, but generally tracks closely with other measures of inflation for consumers.
Federal Reserve officials stressed that policy should be tightened gradually after interest rates are increased for the first time since 2006, in an attempt to shift investors’ focus as NY Fed President William C. Dudley said the conditions for liftoff “could soon be satisfied”. “When the dollar rises even after poor economic news, it is a clear sign that markets have concluded that a rate hike is on its way”, said IG’s senior market analyst Chris Beauchamp.
Core retail sales (which exclude motor vehicle, gas station, food and building material store receipts) rose a smaller-than-expected 0.2%, following an upwardly revised 0.1% gain in September.
More importantly, after interest rate hikes, it will become more difficult for the business sector to use financial management to raise their net profit, and it will be harder for companies to boost their share prices via methods such as share buybacks, increasing dividends and acquisitions. The median estimate of policy makers’ forecasts submitted for the FOMC projected the rate at 1.4 per cent by the end of 2016. And it ranks in the 99.9th percentile of the widest spreads over the past 10 years. The heavy political baggage of raising rates during an election cycle would probably preclude a hike after March, Anderson said.
Despite the disinflationary pressures, the forward-looking Fed is unlikely to wait to see “the whites of inflation’s eyes” before raising interest rates.
Estimates in the Bloomberg survey of 70 economists ranged from a 0.2 drop to a 0.6 percent advance. That’s up from 35 percent just a month ago. Benchmarks in Taiwan, Singapore, the Philippines and New Zealand also fell. Those costs were up 0.1 percent in the last 12 months. The Aussie at one point was 1.1 percent higher versus the dollar in overnight trading. A few economists prefer this figure because it excludes the report’s most volatile components.
Furthermore, the stronger dollar has prevented the Fed from realizing its goal of 2 percent inflation.
The latest was Cleveland Fed President Loretta Mester, who said in a speech on Friday “my own assessment is that with the economic progress we have made and that I expect to continue, the economy can handle an increase in the fed-funds rate”. Silver has dropped for four consecutive weeks.
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Indian ADRs ended in red, HDFC Bank was down 1.21%, Tata Motors was down 0.72%, Dr. Reddy’s Lab was down by 0.30%, ICICI Bank was down 0.13% and Infosys was down 0.11%.
