- Philadelphia Fed President Harker: Asset Purchases Should be Reduced
- Chinese Fluctuation in Global Markets
- Gold Investors Focused on Consumer Inflation Data
Philadelphia Fed President Harker: Asset Purchases Should be Reduced
Philadelphia Fed President Patrick Harker said he would support the reduction of asset purchases before long. Harker told Nikkei that there is not a lack of demand in the economy, but supply-side problems exist.
He stated that people are worried about children or the elderly and are afraid to return to their workplaces. Harker said, “Quantitative easing affects demand, not supply. When asset purchases begin to be reduced, the Fed should continue it for 8 to 16 months.”
Also, speaking about borrowing costs, Harker predicted that interest rates would be raised in late 2022 or early 2023.
He pointed out that supply chain disruptions that led to much of the inflation could take longer than expected. “Within the framework of the Fed’s new policy, inflation above 2 percent is a good thing, but the risk of inflation being well above this level needs to be minimized,” Harker said.
Chinese Fluctuation in Global Markets
While China’s new move negatively affected the pricing in the Asia Pacific markets, global market actors focused on the data to be announced from the USA.
With the clarification of China’s plan to split Ant Group, Asia Pacific markets started the week with hard sales. A decrease of nearly 2 percent was observed in the Hong Kong Hang Seng index, which is dominated by Chinese technology giants. More moderate losses were displayed in Japan’s Topix and South Korea’s Kospi.
US futures are rising ahead of key data of the week such as the CPI to be announced on Tuesday and retail sales to be announced on Thursday. Futures on the S&P 500, which closed Friday with a 0.7 percent loss and recorded the hardest weekly loss since June with 1.7 percent, are on the rise.
Bloomberg Dollar Index is flat at 1.146. Many developing countries’ currencies are losing against the dollar. The South Korean Won leads the losses with 0.5 percent.
Oil rises as Hurricane Ida hits US inventory. The October US crude oil futures contract rose 0.4 percent to $70, while the November Brent contract rose by the same rate to exceed $73.
Gold Investors Focused on Consumer Inflation Data
Gold investors focused on consumer inflation data to be released this week, which could hint at a reduction in asset purchases after last week’s US producer inflation beat expectations.
Gold is following a flat course after producer inflation in the USA increased faster than expected. According to data from the US Department of Labor, PPI increased 0.7 percent month-on-month in August, while PPI recorded the largest annual increase since 2010 with 8.3 percent. The median expectation of economists surveyed by Bloomberg was 0.6 percent monthly and 8.2 percent annual increase.
After the PPI, which was followed closely in the USA last week, eyes are turned to the CPI data that will be announced on Tuesday this week, while economists expect the inflation in the USA to regress, albeit to a limited extent, in August.
Ounce gold, which was traded in a narrow price range last week, closed the week with losses for the first time in 4 weeks.