The U.S. economy continues to show "sustained improvement" from the impact of the coronavirus pandemic and ongoing job market gains, but inflation has "increased notably in recent months," Jerome Powell said. In his remarks, which were released by the Fed late Monday afternoon, Powell said he regards the current jump in inflation, in fact, as likely to fade. He also restated his concern that the recovery remained uneven, with joblessness still hitting lower-wage workers, Blacks and Hispanics the hardest. Powell in his remarks said he felt that jobs gains "should pick up in coming months" as COVID-19 vaccinations continue and the reopening of the economy proceeds. Still "the pandemic continues to pose risks," he said.
ECB's Centeno says euro zone inflation rise is temporary, sees no permanent effects
The recent rise in inflation in the euro zone and the United States is temporary and is unlikely to have permanent effects, European
Central Bank (ECB) Governing Council member Mario Centeno said on Monday. This means the ECB should be able to maintain its current asset purchase programme until March 2022 and liquidity support measures are expected to be in place "at least until June 2022", Centeno told a banking conference in Lisbon. Inflation in Europe could be explained by changes to the tax framework in some countries in the region, according to Centeno, alongside supply chain difficulties. "There is no evidence of permanent effects on the inflation rate," he added. Inflation in the 19 countries sharing the euro rose 0.3% month-on-month in May for a 2.0% year-on-year increase. The ECB aims to keep inflation below, but close to, 2%.
Asia needs to keep Covid under control before the Fed hikes rates, says economist
Asian countries have to tame the current waves of the coronavirus outbreak in order to get their economies ready for future rate hikes by the U.S. Federal Reserve, an economist said Monday. Fed officials last week indicated that interest rate hikes could come
as soon as 2023, shifting from earlier comments in March that said the U.S. central bank was not expecting any increases until at least 2024. Higher U.S. rates would lure investors from abroad, and central banks in other countries may have to raise their own rates in defense. Raising interest rates could help countries prevent too much capital from leaving their economies, but increasing rates too quickly heightens the risk of an economic slowdown.
Dollar catches breath as traders await Powell testimony
The 10-year government bond yield (interpolated) on the previous trading day was 1.85, -1.00 bps. The benchmark government bond yield (LB31DA, 10.5 years) was 1.82, -1.00 bps. LB31DA could be between 1.80-1.86. Meantime, the latest closed US 10-year bond yields was 1.50%, +5.00bps. USDTHB on the previous trading day closed around 31.60 Moving in a range from 31.59-31.68 this morning. USDTHB could be closed between 31.60-31.70 today. Meantime, The dollar paused for breath on Tuesday as traders
looked to testimony from U.S. Federal Reserve chair Jerome Powell for guidance, after a surprise shift in the central bank's policy
outlook, while cypto-currencies nursed heavy losses.
Sources : Bloomberg, CNBC, Investing, CEIC
