Main Topic: U.S. inflation and the Federal Reserve's efforts to control it.
Key Points:
1. U.S. inflation has declined for 12 straight months, but consumer prices increased 3% year-on-year in June.
2. The Federal Reserve aims to reduce inflation to about 2% and plans to raise its key federal funds rate to over 5%.
3. The Fed is concerned about high inflation due to a strong labor market, rising wages, and increased consumer spending, and aims to slow the job market to control inflation.
The Federal Reserve aims for a "soft landing" in guiding the US economy by raising interest rates to control inflation while avoiding a recession, with signs of stabilization appearing in Jackson Hole's economy as supply chains normalize and pricing pressures ease.
Wall Street's major averages rebounded with growth in communication services and technology sectors, while Treasury yields sank as a recent bond sell-off eased; traders are now waiting for Nvidia's quarterly results to gauge the AI market, and investors are hopeful for potential interest rate policy clues from the upcoming Jackson Hole Symposium.
Stocks rebounded after Fed Chair Jerome Powell indicated that the central bank is prepared to raise interest rates further, providing a cautious but ultimately optimistic outlook on the economy.
Asia-Pacific markets started the final trading week of August higher after U.S. Federal Reserve chair Jerome Powell said that inflation remains "too high" and that the central bank is "prepared to raise rates further if appropriate."
High energy prices and strong economic growth could lead to a rebound in inflation, with prices likely hovering around 5%, according to a former White House economist.
The U.S. dollar rebounded from previous losses as investors awaited labor market data for clues on the Federal Reserve's policy path.
Wall Street extends rally and dollar rebounds on the last trading day of August as inflation data suggests the Federal Reserve will pause on interest rate hikes.
The latest inflation data suggests that price increases are cooling down, increasing the likelihood that the Federal Reserve will keep interest rates unchanged in their upcoming meeting.
The rebounding crude oil prices and fading annual base effects suggest that energy prices may become a headwind for global markets, potentially complicating the battle against inflation and tightening monetary policies.
The U.S. services sector unexpectedly gained momentum in August, with new orders and higher input prices, indicating potential signs of continued inflation pressures.
The Federal Reserve may be the cause of rising housing prices and the low supply of existing homes, which could lead to increased inflation and concerns about the Fed's response to the cost of living. Lowering interest rates and unlocking the supply of homes could help alleviate the issue.
China's consumer price index rebounded in August after slipping into deflation in July, indicating a post-Covid economic recovery, despite sluggish domestic consumption and concerns of a relapse into deflation in the coming months.
Inflation is expected to rise in August as oil and gasoline prices increase, putting pressure on the economy and potentially leading to higher interest rates and a stronger dollar.
Rising oil prices are making it harder for the Federal Reserve to achieve its 2% inflation target, as increased energy costs could lead to higher prices for goods and services, potentially complicating the Fed's plan to hold interest rates steady and achieve a "soft landing" for the economy.
Investors and the Federal Reserve will have to wait for inflation to return to acceptable levels, as the Consumer Price Index report for August 2023 shows consumer prices rising at half the pace compared to a year ago, despite a jump in gas prices.
The Consumer Price Index is expected to show an increase in inflation in August, with headline inflation rising to 3.6% and core inflation easing to 4.4%, but the market is accustomed to this trend and the Federal Reserve is unlikely to change its rates at the upcoming meeting.
The resilient growth of the US economy is fueling a rebound in the dollar and causing bearish investors to rethink their positions, although the currency's rally may face challenges from upcoming data and the Federal Reserve's meeting this month.
Inflation in the US is expected to accelerate again, with economists predicting a monthly rise of 3.6%, suggesting that price pressures within the economy remain a challenge in taming high inflation.
U.S. consumer prices are expected to have increased the most in 14 months in August due to rising gasoline costs, while underlying inflation is forecasted to remain moderate, potentially prompting the Federal Reserve to keep interest rates steady.
Rising energy costs are predicted to contribute to an increase in inflation rate, but it is unlikely to prompt the Federal Reserve to raise interest rates, though there may be another rate hike in the future.
Despite a spike in gas prices, the rise in inflation appears to be easing gradually, with core prices exhibiting a slower increase in August compared to July, suggesting that price pressures are being brought under control.
Inflation in the US accelerated for the second consecutive month in August due to rising costs of rent and gasoline, with the consumer price index rising 0.6% from the previous month and 3.7% from the same time last year.
Stronger-than-expected U.S. economic data, including a rise in producer prices and retail sales, has sparked concerns about sticky inflation and has reinforced the belief that the Federal Reserve will keep interest rates higher for longer.
US wholesale prices increased at a faster pace in August, indicating that inflation remains persistent despite interest rate hikes by the Federal Reserve.
Producer prices rose more than expected in August, signaling further inflationary pressures due to a surge in energy costs.
Despite elevated inflation, the Federal Reserve is not expected to lower interest rates soon, causing the Consumer Price Index to rise significantly and impacting mortgage rates and home prices.
The Federal Reserve faces the challenge of bringing down inflation to its target of 2 percent, with differing opinions on whether they will continue to raise interest rates or pause due to weakening economic indicators such as drops in mortgage rates and auto sales.
Despite assurances from policymakers and economists, inflation in the US continues to rise, posing significant challenges to the economy and financial stability.
The Federal Reserve is expected to keep interest rates steady and signal that it is done raising rates for this economic cycle, as the bond market indicates that inflation trends are moving in the right direction.
Stocks rebound and Treasury prices rise after three Federal Reserve officials warn of possible further rate hikes to control inflation, with the officials uncertain if the battle against inflation is over.
Investors are preparing for more inflation data from the US and Europe this week while still digesting the surprising and contradictory central bank decisions from last week, causing global markets to feel the heat as US bond yields surge and a strengthened dollar hits a six-month high.
The Federal Reserve has upgraded its economic outlook, indicating stronger growth and lower unemployment, but also plans to raise interest rates and keep borrowing costs elevated, causing disappointment in the markets and potential challenges for borrowers.
Inflation is expected to rebound in 2024 due to a mismatch between supply and demand created by the shift from services to goods during the pandemic, as well as a chronic shortage of workers, according to BlackRock strategists. This could lead to higher interest rates and a higher risk of recession.
Australian consumer inflation grew as expected in August, driven by surging energy and housing costs, raising speculation that the Reserve Bank may need to further increase interest rates.
The Federal Reserve's preferred measure of price growth is expected to show that the fight against inflation is back on track after a summer setback.
The Federal Reserve's preferred measure of inflation decreased in August, indicating that efforts to combat inflation are progressing, although there are still price growth pressures that could lead to further interest rate hikes by the central bank.
The U.S. economy is experiencing turbulence, as inflation rates rise and U.S. Treasuries lose value, leading to concerns about whether Bitcoin and risk-on assets will be negatively impacted by higher interest rates and a cooling monetary policy.
Higher gas prices drove an increase in an inflation gauge tracked by the Federal Reserve in August, but measures of underlying inflation slowed, suggesting overall price pressures are moderating and raising the likelihood that the Fed will leave interest rates unchanged in its next meeting; however, the combination of higher gas prices and sluggish income growth may weaken consumer spending and mark a slowdown from last summer's healthy pace of spending.
The Federal Reserve's shift towards higher interest rates is causing significant turmoil in financial markets, with major averages falling and Treasury yields reaching their highest levels in 16 years, resulting in increased costs of capital for companies and potential challenges for banks and consumers.
Asian markets are expected to rebound following a relief bounce around the world on Wednesday, with currency traders keeping an eye on inflation reports from across the continent.
The stock market rebounded despite a strong jobs report and higher Treasury yields.
Stock markets are wavering as investors anticipate another rate hike by the US Federal Reserve, fearing its impact on the global economy, however, recent inflation data suggests that inflation is declining and consumer spending is rising.
