Global markets decline amid Fed policy rate reduction concerns

(MENAFN) Global markets experienced a downward trend amid growing concerns that the Federal Reserve may delay its policy rate reduction, as indicated by Chairman Jerome Powell's remarks on Wednesday, along with the release of the ADP National Employment Data in the US.

Uncertainty persists regarding the timing and pace of interest rate cuts by central banks, anticipated to commence this year, with ongoing impacts on asset prices driven by macroeconomic data releases.

In February, the number of job openings in the US, as reported by the Job Openings and Labor Turnover Survey, rose by 8,000 compared to the previous month, reaching 8.7 million. Additionally, factory orders surged by 1.4 percent during the same period, surpassing market expectations, according to data unveiled on Tuesday. These figures suggest robust economic activity in the US, leading analysts to believe that the Federal Reserve may not rush into interest rate cuts.

Nevertheless, cautious statements from Fed officials, including San Francisco Fed President Mary Daly and her Cleveland counterpart Loretta Mester, have tempered risk appetite. They indicated on Tuesday that while they still anticipate three rate cuts by the Federal Reserve this year, they are not in a hurry to initiate the easing of borrowing costs. Mester highlighted that she would refrain from making premature judgments regarding monetary policy meetings but did not rule out the possibility of a rate cut in June.

In response to these developments, a decline of 0.1 percent was observed in the US dollar index, reaching 104.7. However, a bearish trend was observed in bond markets, with the US 10-Year Bond surpassing 4.4 percent on Tuesday, marking its highest level since November, before ending the day at 4.35 percent and standing at 4.36 percent on Wednesday.

Despite the strength of the US dollar and the increase in bond yields, the price of gold per ounce reached a record high of USD2,288.5 on Wednesday, extending its upward trajectory for the seventh consecutive trading day.


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