Yields, Dollar Rise After Stronger-Than-Expected US PPI Data
Treasury Yields and Dollar Surge After Positive US PPI Data
U.S. Treasury yields rose and the dollar edged up against the yen on Friday after data showed U.S. producer prices increased more than expected in January, adding to the view that any interest rate cuts by the Federal Reserve are not imminent.
Stock Market Reaction to the PPI Data
U.S. stocks ended lower, while the MSCI global stock index dipped slightly.
Positive PPI Rebound
The producer price index for final demand rose 0.3% last month after declining by a revised 0.1% in December, the Labor Department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast the PPI rebounding 0.1% following a previously reported 0.2% drop.
Market Expectations and Impact on Fed’s Rate Cut
On Friday, market expectations the Fed will start cutting rates in June were dialed back, with CME’s FedWatch Tool now showing a 69.9% chance for a cut of at least 25 basis points, down from the nearly 90% in the prior session.
Expert Opinion on the PPI Data and Fed’s Decision
“A number like this, it definitely pushes off the Fed for another month or two,” said Tom di Galoma, co-head of global rates trading at BTIG in New York.
Impact on Treasury Yields and Currency Exchange Rates
The yield on the benchmark U.S. 10-year Treasury note climbed 5.3 basis points to 4.293%, down from an earlier high of 4.33%, and was on pace for its second straight weekly gain. The greenback also gained after the data. Against the Japanese yen, the dollar was last up 0.23% at 150.26.
Market Movements and Global Stock Index
Bank of Japan Governor Kazuo Ueda said on Friday that monetary policy would most likely remain accommodative, even after ending negative interest rates, echoing recent reassurances from BOJ officials that have weighed on the yen.
Wall Street and Global Stock Market Performance
On Wall Street, the fell 145.13 points, or 0.37%, to 38,627.99, the lost 24.16 points, or 0.48%, to 5,005.57 and the lost 130.52 points, or 0.82%, to 15,775.65. U.S. markets will be closed on Monday for the Presidents’ Day holiday.
Global Stock Market and Commodity Price Movements
MSCI’s gauge of stocks across the globe fell 0.31 points, or 0.04%, to 750.24, while Europe’s index rose 0.62%. Earlier on Friday, Japan’s benchmark rallied to a 34-year high and was on the cusp of eclipsing the all-time peak reached during the heyday of the nation’s bubble economy in the 1980s. Figures on Thursday showed that Japan and Britain slipped into recession at the end of last year.
Gold and Oil Market Performance
Gold eased early on Friday and was set for a second straight weekly fall, but was last up 0.4% on the day at $2,012.86 per ounce. Oil prices rose amid geopolitical tensions in the Middle East. futures gained 61 cents to settle at $83.47 a barrel, while U.S. West Texas Intermediate crude rose $1.16 to settle at $79.19.
