The Fed will have to get back in the business of forecasting, says New Century's Claudia Sahm
Claudia Sahm, New Century Advisors chief economist, joins 'Power Lunch' to discuss the hawkish tone of the Fed following its decision to leave rates unchanged.
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CNBC
2 hours ago
- CNBC
Dollar steadies after rally, focus shifts to US-China trade talks
The dollar held steady against all major currencies on Monday, as exuberance over an upbeat U.S. employment report gave way to caution ahead of pivotal U.S.-China trade talks set to take place in London later in the day. The talks come at a crucial time for both economies, with China grappling with deflation and trade uncertainty dampening sentiment among U.S. businesses and consumers, prompting investors to reassess the dollar's safe-haven status. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are expected to represent the U.S. at the trade talks, while vice premier He Lifeng would likely be present with the Chinese delegation. "A deal to keep talking might be better than nothing, but unless we see a concrete breakthrough, the impact on sentiment is likely to remain muted," said Charu Chanana, chief investment strategist at Saxo Markets. Friday's upbeat U.S. jobs report yielded some relief for investors following other bleak economic data last week. The dollar advanced against major peers after the employment report, which cut weekly declines in the dollar index by more than half. However, it is still down by more than 8.6% for the year. On Monday, the yen firmed 0.10% at 144.750 per dollar, as data showed Japan's economy contracted at a slower-than-expected pace in the January-March period. The Swiss franc was steady at 0.8221 per dollar by 0041 GMT. The euro was last flat at $1.1399, while the sterling fetched $1.3535. The dollar index, which measures the U.S. currency against six others, was steady at 99.169. The yield on 10-year Treasury notes was flat in early Asia trading, after a more than 10 basis points jump on Friday. New Zealand's dollar last bought $0.6020, while the Australian dollar inched up 0.1% at $0.65 in light volumes as markets were closed for a public holiday. An inflation report out of the U.S. for the month of May will be in the spotlight later in the week as investors and Federal Reserve policymakers look for evidence on the damage trade restrictive policies have had on the economy. Fed officials are in a blackout period ahead of their policy meeting next week, but they have signalled that they are in no rush to cut interest rates and signs of better-than-feared economic resilience are likely to further cement their stance. Interest rate futures indicate that investors are anticipating the central bank may cut borrowing costs by 25 basis points, with the earliest move expected in October this year, according to data compiled by LSEG. "May is the first month where the impact of Trump's 10% universal tariff on imports ex-USMCA is expected to show. The Fed will want a few months of inflation data in order to judge the tariff impact and most importantly, its persistence," analysts at ANZ Bank said. Elsewhere, China's offshore yuan was last at 7.187 per dollar ahead of inflation and trade data.
Yahoo
2 hours ago
- Yahoo
Morning Bid: Markets pin hopes on London trade talks
A look at the day ahead in European and global markets from Rocky Swift Optimism abounds in the markets that the United States and China will reach a rapprochement in London today, after a phone call last week between leaders of the world's two largest economies turned down the heat on their protracted rift over trade. Both sides have strong incentives to ratchet down the rhetoric and find agreement as their economies remain tightly linked, although U.S. President Donald Trump has shown interest in decoupling them. The market reacted favourably on Friday to U.S. jobs data that showed less of a slowdown than feared, temporarily easing concerns about the trade war's fallout. But that was counterbalanced today when China's dour producer price data added to evidence that the spat is taking its toll. Asian shares rebounded sharply on Monday, reacting to Friday's exuberance on Wall Street. Equity futures pointed to a slightly lower open in Europe, while U.S. stock futures, the S&P 500 e-minis, slid 0.2%. On the trade front, representatives from the U.S. and China, due to meet at a still undisclosed location in London, will attempt to revive a preliminary trade agreement reached in Geneva last month. Trump is threatening to impose triple-digit tariffs on Chinese goods, while Beijing's key leverage is its near stranglehold on rare earth minerals that are critical to many high-tech sectors. Perhaps persistence is the key. Japan's chief trade negotiator Ryosei Akazawa is planning a sixth round of talks in Washington this week, Kyodo News reported. The economic and earnings slate is practically empty today. The next major figures to watch out of the U.S. will be inflation data on Wednesday, followed later in the week by producer price figures, weekly jobless claims and the University of Michigan report on consumer sentiment. The Fed is in a blackout period ahead of its June 18 policy decision. The markets were also keeping an eye on events in Los Angeles, where National Guard troops are facing down protesters demonstrating over Trump's immigration policies. Videos showed part of a major freeway in the city blocked by activists. California on its own is the world's fourth-largest economy, exceeding Japan's gross domestic product, and Trump deployed guardsmen to its biggest city to counteract what the White House described as "chaos, violence and lawlessness". Governor Gavin Newsom called Trump's reaction "the acts of a dictator". Key developments that could influence markets on Monday: - U.S. wholesale inventory data for April. - Mexico reports inflation and producer price data for May. Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here. (By Rocky Swift; Editing by Edmund Klamann)
CNBC
2 hours ago
- CNBC
Gold drops as US-China trade deal hopes ease safe-haven demand
Gold prices declined on Monday as optimism over easing U.S.-China trade tensions dampened safe-haven demand, while a stronger-than-expected U.S. jobs report tempered expectations of interest rate cuts by the Federal Reserve. Spot gold fell 0.4% to $3,298.12 an ounce as of 0214 GMT. U.S. gold futures lost 0.9% to $3,317.40. Three top aides of U.S. President Donald Trump will meet with their Chinese counterparts in London later in the day to discuss resolving the trade dispute between the two largest economies, a standoff that has kept global markets on edge. "Short-term traders do not want to take aggressive long positions right now ahead of the outcome of U.S.-China talks," said Kelvin Wong, a senior market analyst, Asia Pacific at OANDA. However, tariffs won't disappear, but talks may lower the baseline, Wong said, addingthat the cost of doing business in the U.S. will remain elevated and the widening U.S. budget deficit could create a double feedback loop that exacerbates inflationary pressures. The U.S. economy added 139,000 jobs in May, surpassing analysts' expectations, while the unemployment rate was unchanged at 4.2%, the Labor Department said. Wage growth exceeded forecasts, dampening the likelihood of imminent rate cuts. Investors scaled back bets on rate cuts and are anticipating one reduction in October, while awaiting the U.S. CPI data due on Wednesday for more cues. Meanwhile, Trump said a decision on the next Fed chair would be announced soon, adding that a "good Fed chair" would lower rates. On the geopolitical front, Trump's order banning citizens of 12 countries from entering the U.S. takes effect on Monday. Non-yielding bullion, often viewed as a safe-haven asset during economic and geopolitical uncertainties, tends to perform well in a low-interest-rate environment. Elsewhere, spot silver was unchanged at $35.97 per ounce, platinum fell 0.5% to $1,163.64, while palladium held steady at $1,046.18.
