Manus on Markets: What Nvidia and AMD's China chip sales deal really means
Manus Cranny, The National's geo-economics editor, cuts through the noise and presents insights from the stories making headlines around the world.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
17 minutes ago
- Zawya
Fed more hamstrung by murky data than Trump interference: McGeever
(The opinions expressed here are those of the author, a columnist for Reuters.) ORLANDO, Florida - It's widely believed that U.S. President Donald Trump's insistence on lower interest rates is what's making life most difficult for Federal Reserve Chair Jerome Powell and his colleagues. But what's causing the biggest headache for Fed officials is, in fact, probably more prosaic: economic data. The key challenges facing Powell were encapsulated perfectly on Tuesday by the release of an inconclusive U.S. inflation readout followed by Trump's latest verbal attack – and threats of a "major lawsuit." Politics aside, most Fed officials agree that rates will fall this year, with the median "dot plot" in the Fed's June Summary of Economic Projections pointing to 50 basis points of easing through December. Traders are betting heavily that the first move will be in September. But it's tough to justify that confidence based purely on economic data. While some indicators suggest policy should be eased sooner rather than later, others indicate that would be a high-risk move. Looking at the "totality of the data," to borrow a phrase from Powell, there is no clear signal either way. PLENTY NOISE, FEW SIGNALS Consider the latest U.S. inflation and employment reports, the two most important data sets. On their own, they don't appear soft enough to warrant the Fed trimming rates right now, but they also aren't firm enough to dispel the notion that policy easing is only a question of "when" not "if." Annual headline CPI inflation held steady in July at 2.7%, contrary to an expected rise, with month-on-month increases in line with forecasts. But annual core inflation rose more than expected to 3.1%, the highest level since February and still meaningfully above the Fed's 2% target. Economists calculate that durable goods prices rose 1.7% in the first six months of the year – the biggest six-month rise since 1987, excluding the COVID-19 pandemic. They warn there is likely more of that to come as Trump's tariffs kick in. "July's CPI data are probably more worrying under the surface than in the headlines, and we expect the upward pressure to goods inflation to build in the coming months," James Pomeroy, a global economist at HSBC, wrote on Tuesday. Meanwhile, last week's employment report showed job growth in July was much weaker than anticipated, and, more importantly, downward revisions to the previous two months were among the biggest on record. But these ominous signals were offset by accelerating wage growth, an increase in hours worked, and a meager rise in the unemployment rate. Hardly signs of a shaky labor market. Nevertheless, markets focused more on the softer elements in the jobs data, suggesting investors think the Fed's bar to easing is much lower than the bar to standing pat. Indeed, the rates market is now pricing in a near-100% chance of a cut at the U.S. central bank's September 16-17 meeting. RISK MANAGEMENT But markets may be getting ahead of themselves. Powell has indicated that a rise in the unemployment rate is needed for the Fed to act. But that rate is potentially being distorted by post-pandemic labor supply issues - employers' reluctance to fire workers and Trump's immigration policies are limiting the number of people looking for work. Regardless, cutting before seeing a meaningful rise in the unemployment rate would be tough to justify, creating a significant communications problem for Powell. And on a more fundamental level, as economist Phil Suttle noted on Tuesday, is preparing to cut rates at full employment just as inflation is accelerating good risk management? This is a particularly apt question when looking at financial markets: the S&P 500 and Nasdaq Composite indexes, gold, and bitcoin are all near record highs, and corporate bond spreads are the tightest in years. This hardly looks like a restrictive policy environment. In that light, patience and caution would appear justified, especially given the added risk of appearing to buckle under Trump's political pressure. If the Fed wants to cut, Powell could use some cover. Unfortunately for him, he's unlikely to find that in this noisy data. (The opinions expressed here are those of the author, a columnist for Reuters) (By Jamie McGeever Editing by Paul Simao)
Gulf Business
17 minutes ago
- Gulf Business
Gold rises higher: Is a $3,400 breakout next as dollar stumbles?
Image credit: Getty Images Gold extended gains to a third straight session on Thursday, supported by rising expectations of an interest rate cut by the US Federal Reserve in September following tame inflation data, which also weighed on the dollar. Spot gold rose 0.4 per cent to $3,367.53 per ounce as of 0156 GMT. US gold futures for December delivery added 0.3 per cent to $3,416.70. Read- 'Markets are pricing in the chance that the Fed cuts 50 basis points in September. So the dollar's weakening, gold's going up as a result, yields are also down,' said Kyle Rodda, financial market analyst. 'The technical setup of The dollar languished near multi-week lows against its rivals, making gold less expensive for holders of other currencies. Benchmark US 10-year Treasury yields held near a one-week low. US consumer prices rose only marginally in July, strengthening expectations of a Fed rate cut next month, with Treasury Secretary Scott Bessent noting there is a good chance the central bank will opt for a 50 bps reduction. Traders now see a cut on September 17 as a near certainty, according to data compiled by LSEG, and even lay around 6 per cent odds on a super-sized half-point trim. Non-yielding gold thrives in a low-interest-rate environment. Investors are awaiting the US economic data due later this week, including the US Producer Price Index, weekly jobless claims and retail sales data for clues into the Fed's rate path.
Zawya
an hour ago
- Zawya
Gold extends rise on Fed rate cut hopes, softer dollar
Gold extended gains to a third straight session on Thursday, supported by rising expectations of an interest rate cut by the U.S. Federal Reserve in September following tame inflation data, which also weighed on the dollar. Spot gold rose 0.4% to $3,367.53 per ounce as of 0156 GMT. U.S. gold futures for December delivery added 0.3% to $3,416.70. "Markets are pricing in the chance that the Fed cuts 50 basis points in September. So the dollar's weakening, gold's going up as a result, yields are also down," said Kyle Rodda, financial market analyst. "The technical setup of gold looks really constructive. The trend still looks higher. We just basically need to see the market break through $3,400 level on a sustained basis." The dollar languished near multi-week lows against its rivals, making gold less expensive for holders of other currencies. Benchmark U.S. 10-year Treasury yields held near a one-week low. U.S. consumer prices rose only marginally in July, strengthening expectations of a Fed rate cut next month, with Treasury Secretary Scott Bessent noting there is a good chance the central bank will opt for a 50 bps reduction. Traders now see a cut on September 17 as a near certainty, according to data compiled by LSEG, and even lay around 6% odds on a super-sized half-point trim. Non-yielding gold thrives in a low-interest-rate environment. Investors are awaiting the U.S. economic data due later this week, including the U.S. Producer Price Index, weekly jobless claims and retail sales data for clues into the Fed's rate path. On the geopolitical front, Ukrainian President Volodymyr Zelenskiy said he warned U.S. President Donald Trump ahead of his talks with Vladimir Putin that the Russian leader was "bluffing" about his desire to end the war. Elsewhere, spot silver gained 0.3% to $38.59 per ounce, platinum added 0.1% to $1,340.55 and palladium rose 1.5% to $1,139.52. (Reporting by Brijesh Patel in Bengaluru; Editing by Sumana Nandy and Subhranshu Sahu)
