While it is unlikely that Janet Yellen will signal the exact timing of U.S. rate hikes, her comments could have an impact on financial markets depending on whether a September, December or 2017 hike is implied. Overall inflation was down 0.4 percent from a year ago.
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Yellen is offering a generally upbeat assessment of the economy in a speech to a conference of central bankers in Jackson Hole, Wyoming. However, the gains were capped after a Saudi energy minister today dampened expectations of “significant intervention” by oil producers at September’s informal meeting. Dallas Fed chief Robert Kaplan said Thursday the pace of interest-rate increases in the US should be “patient and gradual” to limit impact on the dollar, while his Kansas City counterpart said it’s already time to move. “There is a chance that Yellen could decide that a stronger signal about near-term policy would now be appropriate in light of diminished risks globally and an improved US labour market”, HSBC said in a note. Germany’s DAX was down 0.3 percent despite data showing consumer morale brightened heading into September. The MSCI Asia Pacific Index was down 0.5 percent, headed for a 0.6 percent weekly loss.
We anticipate that Yellen’s speech will outline the rationale for taking another step in the policy normalization process, but will also discuss the broader ramifications of a potentially lower equilibrium real rate. Silver was up 1.1 percent at $18.68 an ounce after hitting an eight-week low of $18.46 on Thursday. “If she does make more hawkish comments the market could be chaotic in the short term”.
The S&P 500 was up 0.55%, the Dow Jones Industrial Average added 0.5%, and the Nasdaq rose 0.7%.
OIL: Benchmark U.S. crude oil shed 13 cents at $47.20 a barrel from $47.33.
Shares in Mediaset fell 1.8 percent after a war of words with France’s Vivendi over the sale of the Italian broadcaster’s pay TV unit escalated.
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Expectations of a September rate hike in the United States doubled over the past two weeks. Hong Kong’ Hang Seng index rose 0.3 percent to 22,881.91. Morgan Stanley said this week that zinc is its top commodity pick, forecasting that prices may rally further should China’s steel output remain strong, while cautioning the metal may come under pressure if Glencore Plc restarts mines curtailed past year.
