Markets feel Friday cheer as signs point to Fed pause
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
MARKETS FEEL FRIDAY CHEER AS SIGNS POINT TO FED PAUSE (0554 GMT)
A risk-on rally fuelled by rising expectations the Federal Reserve will stand still on interest rates in two weeks, and by relief that the congress approved a U.S. debt-limit suspension, took hold in Asia and looked set to continue as Europe wakes up.
The U.S. Senate late on Thursday passed bipartisan legislation backed by President Joe Biden that lifts the government's $31.4 trillion debt ceiling, a day after the House of Representatives approved the bill.
And so, the U.S. averts what would have been a first-ever and catastrophic default. The Treasury Department had warned it would be unable to pay all its bills on June 5 if Congress failed to act.
Markets though seemed to have moved on to focus on what the Fed will do in two weeks as U.S. economic data bolstered the case for the Fed to stand pat.
Dovish rhetoric from Fed officials, including comments by Philadelphia Federal Reserve President Patrick Harker on Thursday that it was "time to at least hit the stop button" on rate hikes, has also helped to lift sentiment.
Futures trading indicated an 80% probability that the Fed will refrain from raising rates, compared with a 48% probability a week earlier, according to the CME FedWatch tool.
That all served as fuel for a surge in Asian markets, with the MSCI Asia ex-Japan share index .MIAPJ0000PUS set for its best day since January, while the Nikkei .N225 continued its hot run, setting the stage for an exuberant Friday for European markets.
The pan-European STOXX 600 index .STOXX, which has been languishing near two-month lows, should get a lift.
The U.S. Labor Department's closely watched unemployment report for May is due later on Friday, with the data helping to determine whether the central bank sticks to its aggressive monetary policy.
In the corporate world, Goldman Sachs plans to cut more jobs, the bank's president said, as a difficult economic environment weighs on dealmaking. In January, it let go about 3,200 employees, its biggest head count reduction since the 2008 financial crisis.
At Twitter, the head of trust and safety, Ella Irwin, told Reuters on Thursday that she has resigned from the social media company, which has faced criticism for lax protections against harmful content.
Key developments that could influence markets on Friday:
Economic events: French industrial output data; U.S. nonfarm payrolls
(Ankur Banerjee)
*****
Rate outlook flip flops https://tmsnrt.rs/3MJf3f2
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
