OMM Redaksiyası
Global markets traded mixed as strong US economic data tempered expectations for near-term Federal Reserve rate cuts, while inflation concerns and rising bond yields weighed on risk appetite.
The US economy grew 2.2% year on year in the second quarter, above an initial estimate of 1.5%. Private-sector employment also exceeded market expectations, increasing by 90,000.
The core Personal Consumption Expenditures index, which excludes food and energy and is the Federal Reserve’s preferred inflation gauge, rose 0.2% month on month and 3% year on year in August. The annual increase was below the 3.3% growth expected by markets. In July, the index rose 0.1% monthly and 3% annually.
The report also said the broader US PCE measure increased 0.9% month on month, above expectations, while its annual rise of 0.2% was below forecasts.
Bond yields climb as rate expectations shift
Analysts said easing inflation and strong economic data suggested the US economy remained resilient, potentially allowing the Federal Reserve to avoid raising rates in the near term. Money-market estimates put the likelihood of an October rate hike at 38%, down from 70% before the data were released.
However, the impact of sharply rising diesel prices in September had yet to appear in the data, leaving uncertainty over whether inflationary pressures would ease. Interest rates are expected to remain elevated despite lower-than-expected inflation and stronger growth and employment figures.
The yield on the US 10-year Treasury reached 5.31%, its highest level since 2007, while the 30-year yield rose above 5.65%. Although expectations for an October rate hike eased, markets still anticipate further increases at subsequent meetings, putting pressure on Treasury prices and supporting yields.
The US dollar rose to 101.7 on Thursday, its highest level since June 24, supported by higher yields. Gold gained 0.7% to $4,184 an ounce, while Brent crude for December delivery fell 1.4% to $96.6 a barrel.
US President Donald Trump said former Federal Reserve chair Jerome Powell should resign from the Board of Governors over cost overruns in the central bank’s building renovation project. Trump also said South Korea planned to invest up to $200 billion in major US energy projects.
Trump is considering a ban on diesel exports, but later acknowledged that such a move could affect gasoline prices. Federal Reserve board member Lisa Cook said inflation had remained above the central bank’s target for more than five years and pledged to bring it back to target while preserving a strong labour market.
The Federal Reserve finalised changes to its annual stress tests for large banks, aiming to increase transparency and public accountability while reducing volatility in capital requirements linked to the tests.
US and European shares diverge
Wall Street closed mixed on Wednesday as selling in the bond market weighed on shares, despite inflation coming in below estimates. The Dow Jones Industrial Average fell 0.86% and the S&P 500 declined 0.25%, while the Nasdaq gained 0.24%. US indexes began Thursday higher.
Shares in chipmaker “Micron Technology” rose 0.6% in after-hours trading following better-than-expected earnings. The average US rate on 30-year mortgages rose to 7.3% last week, its highest level since November 2023.
European markets fell on Wednesday as higher energy costs fuelled inflation concerns and pressured bond markets. Germany’s annual inflation rate rose to 3.3% in September, above expectations, amid rising energy costs linked to the escalating conflict in the Middle East. The data increased expectations that the European Central Bank would maintain tight monetary policy.
The UK economy grew 0.5% quarter on quarter and 1.4% year on year in the second quarter, exceeding forecasts. Money-market estimates put the chance of a Bank of England rate hike at 85%.
The FTSE 100 fell 0.29%, Germany’s DAX 40 dropped 0.79%, France’s CAC 40 declined 0.89% and Italy’s FTSE MIB 30 lost 0.84% on Wednesday. European indexes opened lower on Thursday.
Asian markets rise on easing Fed expectations
Asian equity markets were higher near Thursday’s close as expectations for Federal Reserve rate hikes eased and “Micron Technology” earnings lifted chipmaker shares in Japan and South Korea.
Japan’s manufacturing Purchasing Managers’ Index stood at 54.1 in September, in line with estimates. South Korean exports rose 83.5% year on year, exceeding expectations, as semiconductor shipments reached record levels amid sustained global investment in artificial intelligence.
Japan’s Nikkei 225 gained 2.9% and South Korea’s Kospi rose 1.9% near the close. Trading was suspended in mainland China and Hong Kong because of a holiday.
