Economic progress continues in the USA, but its central bank would be wise to continue keeping policy loose, Fed Governor Lael Brainard said in a closely watched speech Monday.
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Economic weakness “counsels prudence”, she said in the last public comments from the Fed until the central bank meets on September 20-21.
Canada’s main stock index slipped, but losses were cushioned by companies gaining on domestic merger activity.
US Treasury rates are slightly down for the day, with much of the support following the Fed’s Brainard reiterating her dovish stance on rates. Her comments come after financial markets were jolted last week out of a period of calm by an uptick in concern over the outlook for central bank policies.
WALL STREET: The Dow Jones Industrial average lost 2.1 percent on Friday to close at 18,085.45. The Standard & Poor’s 500 index rose 31.23 points, or 1.5%, to 2,159.04.
The sharp plunge in US equities on Friday however was due to concerns that the USA central bank could raise interest rates as soon as this month, following comments made by key Fed officials. After a market nose dive on Friday, investors are putting more of their money into safe investments like household goods makers and phone companies.
Worries about a hike in the Fed’s benchmark rate knocked equities on Friday.
In separate speeches, two Fed presidents chimed in today with similar comments, effectively killing the odds of a September hike.
US government debt prices were mostly higher on Monday, as investors digested comments from Federal Reserve Governor Lael Brainard and the results of the Treasury Department’s sale of 10-year and 3-year notes.
The S&P 500 technology index rose 0.52 per cent, helped by a 1.4 per cent rise in Apple.
Tesla Motors rose 2.0 per cent after announcing that it upgraded its Autopilot software to use more advanced radar technology.
US Treasures briefly rose on Brainard’s comments, then fell, pushing yields on the benchmark 10-year note one basis point higher to 1.68 per cent at 1.45pm NY time.
In an interview with CNBC, the Republican presidential nominee warned the stock market could go “way down” when the Fed decides on another rate hike, and said he had “no doubt” rates were still low because of the president and Fed Chair Janet Yellen.
“September is off the table”, said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in NY referring to chances of a hike at the September 20-21 Fed meeting.
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Oil prices drifted lower after closing almost 1 percent higher on Monday, buoyed by a softer dollar and hopes for a deal between Saudi Arabia and Russian Federation on stabilizing crude output at this month’s OPEC meeting.
