PREVIOUS TRADING DAY EVENTS 27 Oct 2023

The cost of goods and services rose a higherthanexpected 0.4 in September, keeping the pressure on the Federal Reserve about raising interest rates again. The increase in the PCE price index monthly figure was reported higher, 30 vs 0.10.

U.S. consumer spending surged in September keeping spending on a higher growth path heading into the fourth quarter. Spending is, however, seen cooling off in early 2024 leaving economists convinced the Federal Reserve is done raising interest rates.

Monthly inflation readings of 0.2 on a sustainable basis are needed to bring inflation back to the U.S. central banks 2 target, according to economists. The core PCE price index rose 3.7 on a yearonyear basis in September, the smallest gain since May 2021, after increasing 3.8 in August.

The Fed tracks the PCE price indexes for monetary policy. It is expected to leave interest rates unchanged next Wednesday as a recent surge in the U.S. Treasury yields and stock market selloff have tightened financial conditions. Thus, the probability of keeping rates unchanged is now estimated to be over 90. But risks of a rate hike remain.

There is more work to be done to sustainably lower inflation towards the 2 target, said Pooja Sriram, an economist at Barclays in New York.

Source httpswww.reuters.commarketsususconsumerspendingbeatsexpectationsseptember20231027

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