As nearly all finance commentators predicted rate cuts as the new financial year looms.
Hopes for real rate cuts fade.
https://www.abc.net.au/news/2024-04-05/asx-markets-business-news-live-updates/103672084The Rivkin report also infers investors dump equities.
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Perhaps the last thing impatient investors want to hear but music to the ears of savers, US Federal Reserve Bank of Minneapolis President Neel Kashkari said interest-rate cuts maynot be needed this yearif progress on lowering inflation stalls—especially if the economy remains robust. He called the January and February inflation readings “a little bit concerning,” and said he needs to see more progress on prices to gain confidence that they’re moving toward the Fed’s 2% target. “In March I had jotted down two rate cuts this year if inflation continues to fall back towards our 2% target,” Kashkari said Thursday. “If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all.” —David E. Rovella
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However, his colleagueinCleveland suggested the central bank could be getting close to itshappy placefor lowering interest rates in the next few months. “I did anticipate that we’ll see inflation moving down and now we need to see more evidence that confirms that,” Loretta Mester said. “And once I see that, then I think we’re in a position to move interest rates down.”
RIVKINUS equities slumped on Thursday as investors await tonight’s non-farm payroll report, as well as fresh concerns of geopolitical tensions.
United States
The S&P500 reversed early gains to drop -1.23% amid broad-based selling with 85% of stocks lower and all sectors negative. The Nasdaq Composite fell -1.4% along with the Russell 2000 -1.08% while the VIX jumped 14.79% to 16.45 on rising geopolitical concerns. The geopolitical tension concerns were linked to comments from Israeli Prime Minister Benjamin Netanyahi that Israel would operate against Iran and its proxies and hurt those of seek to harm it.
Those concerns drove bond yields lower, with the 2-year Treasury yield down -2.7 basis points to 4.645% along with the 10 and 30-year rates by -3.8 and -3.4 basis points respectively. This decline points to risk off behaviour from investors, especially in light of comments from Federal Reserve of Minneapolis President Neel Kashkari that rate cuts may not be needed this year if progress on inflation stalls.
Europe
European equities finished the session modestly higher having closed before US equity markets turned lower. The Euro Stoxx 600 edged up 0.16% along with the DAX 0.19% and CAC 0.48% while the FTSE100 was little changed.
