Market and again, FED!

Fed Speakers in the spotlight! 

By: Ahura Chalki

Market analyst – IFC Markets

FED speakers again kept the focuses on the U.S. and boosted the U.S. dollar. 

Boosting in the U.S. in the past two days did not mean more bulls; it simply meant saving the gains. 

According to yesterday’s published data from Markit, the report showed that the initial value of the service industry PMI in June fell to 64.8 (previously 70.4) and did not perform as well as the market participant were estimating (70.0); however, the overall figure was still higher than the pre-pandemic average. In addition, the initial value of the manufacturing PMI rose to 62.6 from 62.1 last month and exceeding market expectations of 61.4 while continuing to hit a record high. The negative sign was the new home sales that fell to 769,000 in two consecutive months. The last number also was revised down by 46,000 to 817,000.

Besides economic data, especially PMI numbers, many investors followed the FED speakers as one of the leading market drivers. Mr. Bostic and Kaplan, the governors of Atlanta and Dallas FED, helped the USD strength. Yesterday’s speakers mostly were Hawkish. They expect that the short-term inflation rise will be a bit longer and up to 9 months, and price pressure this year will push the inflation rate to 3.4%, but it will ease next year. 

We are waiting for Labor market data, US GDP, Retail Inventories, and other rounds of speeches for today. Later today, Bostic, Philadelphia Fed President Harker, and New York Fed President Williams will also deliver speeches. Compared to most Fed officials, Williams’s position is more inclined to Chairman Powell’s statement and even more dovish. He said that the current U.S. economy “still has a long way to go,” so the improvement is “not enough to take action.” Regarding inflation, Williams also agrees with Powell’s statement that it is expected that the supply side will eventually fail to keep up with demand, and the inflation caused by supply chain issues will be “resolved within the next few months.” Regarding when to start reducing QE, Williams said that “a full set of data around the goals of full employment and price stability, rather than relying on a single data,” he also emphasized that interest rate hikes are still in the “distant future.”

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