The Fed needs to communicate that the rate hike path will be gradual, he said, and he repeated his concerns about the impact of a rate rise when the economy is still not near the Fed’s target rate on inflation.
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TOKYO (AP) – Global stock markets were subdued Friday ahead of a U.S.jobs report that’s likely to influence whether the Federal Reserve raises interest rates in December. The Standard & Poor’s 500 fell 2.38 points, or 0.1 percent, to 2,099.93.
Ultimately, however, the robust recovery in the Dow Jones Industrial Average and the major indices provides a ideal cover story for the Federal Reserve to shift away from their dovish strategies.
Drug stocks were among the biggest decliners, following another steep drop in shares of Valeant Pharmaceuticals. The contract slumped $1.58, or 3.3 percent, to close at $46.32 a barrel on Wednesday as Yellen’s comments pushed up the dollar.
While the government’s monthly jobs report is always important to investors, there is additional focus on this month’s report. Her view was echoed by another Fed policymaker later in the day. Yellen did stress that no decision has been made yet and a move in December will depend on how the economy fares between now and then.
Economists expect that USA employers added 190,000 jobs last month and that the unemployment rate remained steady at 5.1 percent, according to FactSet.
USA two-year Treasury yields rose to their highest in 4-1/2 years and spreads over their German counterparts widened to their maximum since late 2006, boosting the dollar’s allure for investors. The chances for a December rate hike are now perceived as higher than 50 percent after Yellen laid out what appeared to be the base case that the economy is ready for higher rates. Bond yields are at their highest level since right before the Fed’s September meeting.
In addition, a survey of economists conducted by The Wall Street Journal indicated that 64% of financial experts believe that the final month of the year will culminate in a lifting of interest rates – something that hasn’t occurred for almost a decade.
In fresh signs that Asian countries were feeling the heat, central banks from Australia to Thailand voiced caution at their scheduled policy meetings this week while retail sales in Hong Kong fell for the seventh consecutive month.
In the energy markets, US crude oil fell $1.12, or 2.4 percent, to $45.20 a barrel in electronic trading in New York.
TripAdvisor TRIP. O fell 10.1 percent to $74.69 after quarterly results missed estimates. But the Shanghai Composite in mainland China jumped 1.9 percent to 3,590.03.
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Gold slipped to a one-month low of $1,106.70/oz, while silver dropped to as low as $15.06/oz, also a one-month low.
