Daily digest market movers: Gold stays firm amid strong US Dollar
- The Federal Reserve’s Summary of Economic Projections in December showed that policymakers expected GDP in 2024 to be at 1.4% and the Unemployment Rate to be at 4.1%.
- Regarding inflation figures, the Core Personal Consumption Expenditure (PCE) Price Index, favored by Fed Chair Jerome Powell for tracking inflation, is predicted to fall to 2.4% in 2024, aligning with the general PCE forecast.
- December’s Dot Plot suggested that Fed officials were expecting the FFR to end at 4.6%, down from 5.1%. However, if the median moves to 4.8%, that would imply Powell and company are expecting two rate cuts for 2024.
- The latest US economic data witnessed mixed business activity readings, making it challenging to predict the pace of economic deceleration in the US. The labor market has shown signs of cooling, though the economy added more people to the workforce than expected, while fewer people applied for unemployment benefits.
- Recent inflation data in the US showed that inflation on the consumer and producer side surprised to the upside, suggesting that inflation is stickier than expected.
- Given the backdrop, Fed Chair Jerome Powell’s testimony at the US Congress earlier this month, suggesting the Fed would begin to cut borrowing costs, were justified. However, last week’s inflation figures and Retail Sales data triggered a repricing of Fed rate cut bets, aligning with the US central bank's view of 75 basis points of easing toward the end of 2024.
- According to the CME FedWatch Tool, expectations for a June rate cut stand at 64%, down from 72% a week ago.
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