© Reuters
Investing.com – The American fell sharply on Friday, down 1.89% to 110,677, after mixed employment data caused turmoil on the outlook for the Federal Reserve’s interest path.
The data showed that the job market is still able to add more jobs despite news of increasing layoffs, the most notable of which today was Elon Musk who fired 50% of Twitter’s workforce and stopped Amazon (NASDAQ 🙂 and Apple (NASDAQ 🙂 new hiring business right now. But at the same time, unemployment in the United States rose from 3.6% to 3.7%.
The US dollar index rose after the data, but the market remained in turmoil as the data was mixed, which could cause the Fed to slow the pace of the rate hike.
The report indicated that the average hourly wage rose by 0.4%, but wage growth fell to 4.7% year-on-year, after registering 5.0% last month, which means that the wage inflation is falling.
The Fed’s rate monitoring tool now suggests that the Fed will raise rates by 50 basis points, to 66%, to 4.25% -4.50%.
But the Fed has indicated that it will slow the rate of rate hike, and it will not stop, and the rate spike is higher than it was in the past. However, the market has priced the maximum interest rate from 5.25% before the data to 5.09% towards the end of today’s trading.
Expert opinions
“Despite the conflicting data, we don’t think the Fed will review this data and think it has made solid progress in controlling risk,” Jeffers’ Thomas Simmons told Reuters.
He continued: “Wage growth is slowing, job additions are decreasing, but neither is falling fast enough. Today’s data holds the door open for a 75bp rate hike in December, but we should be aware of the important data that separate now and the timing of the next meeting ”.
Dollar bets
According to Reuters calculations, speculators cut dollar long positions to $ 3.08 billion for the week ending November 1, up from $ 10.21 billion last week.
Federal Reserve Chairman Jerome Powell raised expectations of a rate hike aggressively causing the US dollar to rally after Wednesday’s Fed meeting. But the scene now hinges on inflation data to be released next Thursday.
The Fed is confused and confuses the markets
Statements from Fed members were now mixed to show the uncertainty facing the US central bank.
Powell previously said that the repercussions of an over-tightening are much easier to bear than the repercussions of inflation taking root in the economy.
Powell said he is unsure whether or not the Fed will go into recession in the economy due to monetary policy, and future rate hikes remain entirely dependent on incoming data.
A number of Fed members spoke today after the data, including Thomas Barkin, who spoke to CNBC after the data: “The job market remains strong,” but hinted at greater caution in the pace of rising labor. badgers, although it doesn’t put a final figure on what it should be. He did it in December.
“When you put your foot on the brake you think, you think of a switch … and sometimes you move on purpose, and that’s what I’m ready to do,” Barkin said. “I think the repercussions of slowing down the elevator and keeping the elevator for a longer period of time are the best now.”
Evans also spoke to Reuters: “From now on I don’t think proactive action is the most important, I think we should look for the right level of tightening.” “Giving up on a 75 basis point hike gives us time to see more data before events run out, which now makes sense to me.”
“I think it’s time to think about moving from rapid rate hikes to looking at the rate of rise,” Collins said in a letter to Brookings. He added that the Fed will have to raise rates to over 4.6%, which is the target set last September, but it is too early to think about the new high.
As Neel Kashkari said in an interview with the Associated Press, the employment report is “quite healthy” and explained that the labor market is strong and the Fed should do more, but that a faster pace should be adopted. slow rise.
“Previously I expected the interest rate to peak at 4.9% between March and April 2023.” “Given what I want now, I would expect the rate to go higher than this, but to what extent I don’t know.”
Reuters reports that the Fed has not yet hit a nail in the coffin of high inflation at the highest rate in 40 years, but the Fed prefers to extend the time frame to fight inflation.
