Wall Street progresses slightly before market this Friday, following an eventful session yesterday…
(Boursier.com) — Wall Street progressed slightly before market this Friday, following an eventful session yesterday. The S&P 500 is expected to rise 0.2%, the Dow Jones up 0.1% and the Nasdaq up 0.3%. The trend remains uncertain, however, a few hours before the highly anticipated US employment figures for the month of March, and while several Fed officials are still speaking today.
Neel Kashkari, the president of the Minneapolis Fed, weighed down the American stock market last night. While Wall Street was heading towards a nice rise, the markets suddenly turned downward at the end of the day. It must be said that Kashkari suggested that the rate cut was not assured this year. If inflation remains pressing, the official envisages a continuation of the monetary status quo rather than the start of easing. “If we continue to see inflation move erratically, it will make me question whether there is really a need to make these rate cuts,” Kashkari said in an interview with Pensions & Investments.
“There is a lot of momentum in the economy at the moment,” said the head of the Minneapolis branch, who had nevertheless considered two rate cuts this year during last month’s monetary meeting.
So, Kashkari now suggests that if inflation persists higher than expected, the Fed could keep rates in the current range of 5.25% to 5.50% for a longer period of time – and perhaps even all year. Worse, if it still doesn’t work, further rate hikes would not be ruled out, even if “they also do not constitute a likely scenario given what we currently know.” Wall Street also suffered last night from the firmness of crude oil prices against a backdrop of geopolitical tensions, also fueling fears of persistent inflation.
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The boss of the Richmond Fed, Thomas Barkin, estimated yesterday that the institution had time ahead of it, before “the clouds” of inflation disappear, to start reducing rates… An approach cautious approach had already emerged from comments made on Wednesday by Fed Chairman Jerome Powell. The latter indicated that the Fed “had time to think about its first rate cut, after an accelerated cycle of monetary tightening then a period of status quo”. The Fed boss noted the strength of the economy and recent inflation data: “The recent numbers on job creation and inflation have been higher than expected,” Powell noted during a presentation at the Stanford Graduate School of Business. “Recent data does not, however, significantly change the overall picture, which remains that of solid growth, a robust but rebalancing labor market, and inflation which is certainly approaching 2%. on a sometimes bumpy road,” summed up Powell.
Given the strength of the economy and the progress made so far in terms of inflation, the head of the Fed believes that the American monetary institution “has time to let future data guide its decisions”. Thus, decisions will be taken meeting after meeting… “If the economy generally evolves as we expect,” noted the Fed president, a broad consensus is emerging to say that a rate cut would be appropriate. at one time or another of the year. But this will only happen if monetary officials “are more confident that inflation is sustainably approaching” the 2% objective. Thus, the Fed wants to find a balance between premature monetary easing and excessive damage to the economy…
The Fed’s next monetary policy meeting is scheduled for April 30 and May 1. At the end of the March meeting, monetary officials left the ‘fed funds’ rate target unchanged in a range of 5.25% to 5.5% and confirmed that they were still planning three rate cuts this year. Operators anticipate a first monetary easing in June, but this probability is tending to decrease. There remains around 35% probability, according to the FedWatch tool, that the status quo persists after the June 11-12 meeting.
The monthly report on the employment situation in the United States for the month of March will be known this Friday at 2:30 p.m. (consensus 3.8% unemployment, 200,000 non-agricultural job creations and 170,000 in the private sector), and will allow to learn more about the American economic situation.
Remember that job creations in the United States in the private sector for the month of March stood at 184,000 the day before yesterday according to ADP, compared to a FactSet consensus of 150,000 and a level of 155,000 a month earlier, in revised reading. .. The Challenger, Gray & Christmas report on job destruction announcements for the month of March in the United States revealed 90,309 layoffs announced compared to 84,638 a month before.
Consumer credit figures in the United States for the month of February 2024 will be announced this evening at 9 p.m. (FactSet consensus +$20 billion).
Among the Fed speakers this Friday are Susan Collins, Thomas Barkin, Lorie Logan and Michelle Bowman.