A monthly US government report on consumer prices due Tuesday is set to show slower progress toward the Federal Reserve’s 2% inflation target, keeping the central bank biased toward more tightening, according to Bloomberg Economics.
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Up and down Wall Street, it’s becoming increasingly clear that the US bond market won’t see a sustained rally unless the economy surprises even the Federal Reserve by falling into a deep recession.
Federal Reserve Chair Jerome Powell said the US central bank will continue to move carefully but won’t hesitate to tighten policy further if needed to contain inflation.
Recurring applications for US unemployment benefits rose for a seventh straight week, adding to evidence that the labor market is cooling.
The average 30-year mortgage rate plunged last week by the most in more than a year, helping generate the biggest advance in home purchase applications since early June.
Two Federal Reserve officials emphasized Tuesday that bringing inflation fully down to the central bank’s 2% goal is their main focus, amid signs that the economy and labor market are holding up.
Stock and bond markets steadied after last week’s blockbuster rally, with traders still optimistic that US and European central banks may start cutting interest rates as soon as next year.
US job growth slowed in October by more than expected and the unemployment rate rose to an almost two-year high of 3.9%, indicating that employers’ strong demand for workers is beginning to cool.
Federal Reserve Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades after it held off on raising interest rates for a second consecutive policy meeting.
The US Treasury increased its planned sales of longer-term securities by slightly less than most major dealers expected in its quarterly debt-issuance plan, in a move that signals officials may be concerned about the surge in yields over the past several months.