Asia-Pacific markets set for mixed open ahead of RBA rate decision, key U.S. inflation data
The consumer price index set to release Tuesday stateside will determine whether the U.S. Federal Reserve will cut rates in September.
Investors will also be keeping a close watch on Australian markets as the Reserve Bank of Australia is widely expected to slash cash rates later in the day.
Bank of America thinks the Federal Reserve may want to hold off on cutting interest rates at the end of its next FOMC meeting in the wake of the latest jobs report.
"We think those FOMC members that argue for cuts don't put enough weight on the labor supply shock or the fact that inflation is stuck above target, with risks of a larger and more persistent shock after the latest tariff hikes," economist Claudio Irigoyen wrote on Monday. "Cutting in September may risk starting the easing cycle without evidence that inflation has peaked."
He also said that he still doesn't expect the Federal Reserve to cut interest rates this year.
"The downward revision to nonfarm payrolls increases the probability of what we view as the most likely alternate scenario: 'bad cuts,' due to deterioration in the labor market," Irigoyen wrote. "We view the combination of policies to be mildly stagflationary, with significant uncertainty regarding the size and timing of the impact on inflation and growth."
— Sean Conlon
Stocks fell across the board to end Monday's session.
The Dow Jones Industrial Average lost 200.52 points, or 0.45%, and closed at 43,975.09. The S&P 500 slipped 0.25% to end at 6,373.45, while the Nasdaq Composite shed 0.3% to settle at 21,385.40.
— Lisa Kailai Han
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