Source: Sina Finance
The headlines that the global financial media paid attention to last night and this morning mainly include:
1. Yellen doesn’t think the Fed should raise its 2% inflation target
2. Kansas City Fed President: Market turmoil won’t change Fed’s tightening plan
3. U.S. second-hand home sales in April fell to lowest level since June 2020
4. Goldman Sachs and JPMorgan strategists think recession fears are overblown, but some think it’s not that simple
5. Apple shows the AR/VR headset to the board that it has entered the advanced stage of development
6. The dollar drops the most since November 2020 as signs of economic slowdown appear
Yellen doesn’t think Fed should raise 2% inflation target
U.S. Treasury Secretary Janet Yellen dismissed the idea that the Federal Reserve or other major central banks should raise their inflation targets, as stable price expectations are crucial against a backdrop of soaring living costs.
Yellen told reporters in Bonn, Germany, on Thursday that she did not see for now that deglobalization, which could boost price growth trends, was a reason to adjust the inflation target. “The challenge is to achieve the inflation target that has been set,” she said.
U.S. consumer prices have surged more than 8 percent year-on-year in the past two months, and some economists question whether the Fed will be able to pull the rise back to 2 percent within the next few years. That, in turn, has fueled speculation that the Fed may need to raise its inflation target.
Kansas City Fed president: Market turmoil won’t change Fed’s tightening plan
Kansas City Fed President Esther George said “the volatile week in the stock market” was to be expected, partly reflecting the impact of tighter monetary policy. Her support for a 50 basis point hike was unchanged.
“I think what we’re looking for is to convey our policy through market expectations, and tightening is expected,” George said in an interview on Thursday. “That’s one of the ways that financial conditions are tightening.”
The Fed raised interest rates by 50 basis points earlier this month, and Chairman Jerome Powell signaled that the central bank would take action of a similar scale at its June and July meetings, a plan both hawkish and dovish FOMC officials have championed .
“Inflation is so high now that we need a series of rate adjustments to bring it down,” she said. “We do see financial conditions start to tighten, so I think that’s something we have to watch carefully. It’s hard to know for sure how much tightening is needed.”
George used to be seen as a hawkish commissioner, but recently she has become more of a centrist. As a voting member in 2022, she sees no need to raise rates more than previously suggested.
“I think 50 basis points is a reassuring level,” George said. “The balance sheet reduction plan will help tighten policy. “We should act cautiously, make sure the impact of the rate hike is reflected in the economy, and then watch how things develop, that’s going to be my real focus.”
U.S. existing home sales in April fall to lowest level since June 2020
U.S. pre-owned home sales fell to their lowest level since June 2020 in April, hurt by low inventory and rising home prices and mortgage rates.
According to data from the National Association of Realtors (NAR) on Thursday, existing home sales fell 2.4% in April from the previous month to an annual rate of 5.61 million units. The median estimate of economists polled by the media was 5.64 million.
Home sales fell for a third straight month as rising home prices, limited inventory and sharply higher borrowing costs weighed on homebuyers, the data showed. The 30-year mortgage rate rose to 5.5% last week, up from 3.5% at the start of the year, according to the Mortgage Bankers Association.
“Rising home prices and a sharp rise in mortgage rates have led to a reduction in home-buying activity,” NAR chief economist Lawrence Yun said in a statement. , we may return to pre-pandemic sales.”
Goldman Sachs, JPMorgan Strategists Say Recession Fears Overblown, But Some Say It’s Not That Simple
Some of Wall Street’s top strategists say the gloomy outlook for the U.S. economy and stocks may have been overdone.
Goldman Sachs’ David J. Both Kostin and JPMorgan’s Marko Kolanovic believe investors’ fears of an impending U.S. recession are overblown — leaving room for stocks to rally this year. The S&P 500 has fallen 18% from a record high in January, approaching a bear market.
Other strategists are less optimistic, believing that stocks will fall further as central banks halt the monetary policy that has fueled the bull market for most of the past decade.
HSBC strategist Max Kettner and others cut their year-end target for the S&P 500 by 9.2% to 4,450 amid the risk of a severe slowdown in economic growth. Deutsche Bank’s Binky Chadha ranks No. 2 among strategists tracked by the agency in his year-end target for the S&P 500, but has also recently cut his forecasts.
“Financial conditions are just starting to tighten,” said Charu Chanana, market strategist at Saxo Capital Markets Pte. “The market is still digesting the virus, supply issues and inflation – and now with the risk of stagflation, I think we’re just getting started!”
Apple shows its AR/VR headset to the board that it has entered the advanced stage of development
Apple executives showed the upcoming mixed reality headset to the company’s board of directors last week, according to people familiar with the matter, signaling that development of the device has entered an advanced stage.
The company’s board, which includes eight independent directors and Apple CEO Tim Cook, meets at least four times a year. A version of the device was demoed at a recent board meeting, the people said.
In recent weeks, Apple has also accelerated development of rOS, the software that runs the headset, according to people familiar with the matter. This development, combined with the demo on the board, suggests the product could debut in the coming months.
The headset, which combines elements of virtual and augmented reality, is Apple’s next big bet and will be the company’s first major new product category since launching the Apple Watch in 2015, bringing the tech giant into a market still in nascent industry. The company is looking for new ways to expand its equipment business, which accounts for 80% of annual revenue.
Dollar drops biggest since November 2020 on signs of economic slowdown
The U.S. dollar fell the most in 18 months as speculation grew that the economy was about to slow, reversing a rate hike that sparked investors’ rush for the greenback.
On Thursday afternoon in New York time, the U.S. dollar spot exchange rate index fell by 1%, the largest decline since November 2020. The dollar fell to a two-week low against all major rivals.
The decline was a big reversal for the dollar. The dollar had rallied strongly for most of the year as the Federal Reserve signaled plans to sharply tighten monetary policy to keep inflation down. This has strengthened the attractiveness of the dollar against currencies such as the euro and the yen.
But the dollar has begun to change as U.S. Treasury yields have fallen sharply from this year’s highs amid signs that economic growth may be starting to cool. The Swiss franc, long seen as a safe-haven currency, posted its biggest three-day gain in more than two years. The yen is also rising.
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