Oversea-Chinese Banking: Market further cools expectations for Fed rate cuts this year
AInvestThursday, Oct 10, 2024 4:30 am ET
1min read

Overseas Chinese Banking Corporation's Hong Kong economist, Jing Jiang, said that more Federal Reserve officials support a more moderate pace of rate cuts, and the minutes of the September monetary policy meeting showed that the central bank's internal debate over whether to cut interest rates by 50 basis points, the market's expectations for rate cuts this year further cooled. Investors focused on the U.S. inflation data released on Thursday, and the Dow and S&P 500 hit new highs, with U.S. stocks rising for two consecutive days. In the bond market, U.S. Treasury yields continued to rise across the board, with the 10-year yield hitting a ten-week high during the session; the U.S. Treasury Department's auction of $39 billion in 10-year U.S. bonds had a yield of 4.066%, the highest since July, and market participants continued to trade cautiously ahead of the inflation data.

In the foreign exchange market, the U.S. dollar index continued to rise but ran into resistance at the 103 level; most non-U.S. currencies weakened, with the New Zealand dollar and Japanese yen leading the way. The New Zealand dollar weakened against the U.S. dollar by 1.24% on Wednesday, approaching a two-month low, as the rate cut weighed on the currency.

Daly, president of the Federal Reserve Bank of San Francisco, said that the central bank may cut interest rates one to two more times this year if the economy develops as expected; Logan, president of the Federal Reserve Bank of Dallas, said that the authorities should gradually cut interest rates amid economic uncertainty, supporting a slower pace of rate cuts.

The minutes of the September meeting showed that the central bank's officials had a debate over the rate cuts, with some officials saying that cutting by 25 basis points was consistent with the policy of gradually normalizing the economy, but all policymakers believed that the downside risks to the job market had increased, and the risks of achieving the inflation and employment targets were roughly balanced.

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