The Fed has held US rates and reduced its ‘dot plot’ forecast to just one cut in 2024 from three. Earlier, a lower-than-expected US May CPI sent Treasury yields tumbling and stocks surging to record highs. Inflation in India and China was also softer than expected.
In our bonus deep dive interview, NZ Senior Commodities Strategist Daniel Hynes says Asia’s heatwave is putting huge pressure on energy grids already dealing with greater electrification, boosting demand in particular for LNG.
5 things to know:
The FOMC held the Fed Funds Rate as expected, but raised the median in its ‘dot plot’ from three cuts in 2024 to just one, while revising up next year’s cuts from three to four. US core inflation in May of 0.2% was lower than the 0.3% expected. US Treasury yields fell 14 bps. ANZ Head of G3 Economics Brian Martin says the key was the spread in the FOMC’s ‘dots’. Four members saw no cut, seven saw one cut and eight saw two cuts.
The Bank of Thailand’s committee held rates at 2.5% yesterday, with a 6-to-1 vote for the hold, which was one less dissenting view than previously. ANZ Economist Krystal Tan says it’s too early to rule out a rate cut this year.
India’s annual CPI was 4.75% in May, lower than the 4.9% expected due to softer food inflation. ANZ Economist Dhiraj Nim says the Reserve Bank of India will still be uncomfortable with the high food prices.
China’s CPI rose 0.3% from a year ago in May. That was the same as in April, but slightly below market expectations. ANZ Senior China Strategist Zhaopeng Xing says domestic demand remains very weak.
Australia’s May jobs numbers are due later today. ANZ Head of Australian Economics Adam Boyton is picking the unemployment rate to fall back to 3.9%, from 4.1% in April. The consensus is for 4%.
Cheers
Bernard
PS: Catch you tomorrow with that Australian jobs data.
