Dollar, bond yields dip amid benign U.S. inflation data

16 July, 2017, 01:26 | Author: Gladys Mathis
  • Fed chairman's comments saw dollar crash. Tyrone Siu  Reuters

Consumer prices in the USA came in unchanged in the month of June, denting expectations the Federal Reserve will again raise interest rates this year. And the year-over-year core CPI gain was just 1.7%. Other data on Friday showed industrial production picked up in June, driven by a surge in oil and gas drilling.

Turning back to the economic data, consumer price inflation fell to a 1.6 percent annual rate from 1.9 percent prior.

Policymakers are confronted with benign inflation and a tight labor market as they weigh a third rate hike and announcing plans to start reducing the central bank's $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities. The core CPI increased 1.7 percent year-on-year after a similar gain in May.

The Bank of England said in its May inflation report that CPI would peak at 3% later this year, as the pound's slump following the Brexit vote causes price tags on everyday items to tick higher. Financial markets were pricing in a 47 percent chance of a 25 basis point rate hike in December, down from 55 per cent before the data, according to CME Group's FedWatch program.

The greenback reversed from an early more than a 2-week high of 0.9701 against the Swiss franc, edging down to 0.9635. Weak retail sales, meanwhile, signals that consumers have not responded to higher wage gains.

Up until this week, Fed officials had translated the recent moderation in prices as transitory but following Yellen's dovish tilt on Wednesday and today's weak numbers, policy makers will now have to reconsider whether additional rate hikes are warranted this year.

Given the present outlook, we expect the Fed will likely raise rates another 25 bps this year as well as begin the process of slowly unwinding its balance sheet sometime in the fourth quarter.

Lower costs for gas, airline tickets, new and used cars and wireless mobile phone plans kept USA consumer prices flat in June, evidence that inflation remains muted. The UK's FTSE index was trading higher by 0.88 percent, while French CAC 40 Index rose 0.88 percent.

Liu Xiaobo's family by his side when he died: doctors
China condemned the award, put Liu's wife Liu Xia under house arrest, and suspended bilateral relations with Norway in response. It was a courageous fight that Liu fought. "I also wish to express my deepest condolences to his family, particularly Ms.


Detroit Marine Sergeant Is Among 16 Killed in Mississippi Tanker Crash
The crash happened outside the small town of Itta Bena about 85 miles (135 kilometers) north of the state capital of Jackson. Dan Baldassare, 20, of Colts Neck, was killed Monday when the KC-130 military plane he was on crashed in rural Mississippi.


Oil Prices Set to Rally as US Consumption Rebounds, Saudi Shipments Fall
OPEC is struggling to build momentum for a multilateral effort to balance the market through managed production declines. Goldman went as far as saying that oil prices could fall below $40 if the market doesn't get a clear catalyst to buy.


Other currencies including the Australian dollar gained 0.3 percent to 0.7759 extending weekly gain to 1.9 percent, its biggest since period ended March 17.

Americans also paid more for hospital visits and prescription medication, as well as motor vehicle insurance. Retail sales of gasoline were down 1.3%, based largely on lower prices. Inflation came-in flat versus an expected.2% gain, and retail sales fell by.2% against the expectation for a.1% gain. Food and beverage stores were down 0.4%, department stores were down 0.7% and restaurant sales were down 0.6%.

After the report, which was released simultaneously with retail sales for the same month, the dollar weakened.

The continued drop in sales surprised economists, who had expected sales to inch up by 0.1% compared to the 0.3% decrease originally reported for the previous month. Meanwhile, growth and inflation has started to show with more consistency in Europe and the United Kingdom, and this has led to even more deductive weakness in the Greenback as traders shift rate hike bets in the Euro and British Pound.

"Dollar-yen has got a lot more downside and it could easily go to 110 yen before the summer is out, in fact the next few weeks, especially with USA yields heading lower", Franulovich said.

The University of MI is due to release its preliminary report on consumer sentiment in the month of July.

Inflation is expected to remain at its highest level in almost four years, as rising prices on the back of the Brexit-hit pound continued to squeeze British households. The Atlanta Federal Reserve is forecasting GDP to have risen at a 2.6 per cent rate in the second quarter.

Recommended:

  • Lea Michele, Dianna Agron and more pay tribute to Cory Monteith

    Lea Michele, Dianna Agron and more pay tribute to Cory Monteith

    Michele and Monteith met while filming the long-running, award-winning musical series Glee , and they soon sparked a relationship. The number five represents the football jersey digit Monteith's Glee character wore as quarterback at McKinley High.
    Judiciary chair says he will ask Donald Trump Jr. to testify

    Judiciary chair says he will ask Donald Trump Jr. to testify

    Pressed on whether the committee would subpoena Trump Jr ., Grassley said, "Let's wait and see what he does from our letter". Grassley is now asking how it was possible for Veselnitskaya to enter the United States for the meeting without a visa.
    Slow moving storms threaten flash flooding overnight

    Slow moving storms threaten flash flooding overnight

    Forecasters say one or more rounds of thunderstorms are expected into late Wednesday night along and north of US 30. Counties within the watch include Cuyahoga, Erie, Geauga, Holmes, Huron, Lake, Lorain, Medina, Sandusky and Summit.
  • Charged In Killings Of Pennsylvania Men, All Bodies Recovered

    Charged In Killings Of Pennsylvania Men, All Bodies Recovered

    Weintraub also told reporters they have heard the four missing men know each other, but that detail is still unconfirmed. As we reported Thursday , Cosmo DiNardo confessed to those murders in addition to the killing of Jimi Taro Patrick, 19.
    Brides left high and dry after Alfred Angelo announces its closing

    Brides left high and dry after Alfred Angelo announces its closing

    Patricia Redmond responded to our inquiry and said, "Yes, the company has closed all stores and is filing Chapter 7 bankruptcy". A look at the company's website and social media accounts offer no glimpse as to what is going on behind the scenes.
    Privately-owned USA  firm plans to land spacecraft on Moon

    Privately-owned USA firm plans to land spacecraft on Moon

    The launch deadline is the end of 2017, so Moon Express hopes to launch Lunar Scout , its first planned expedition, this year. The MX series of spacecraft also can be scaled up for travel to other destinations, such as the moons of Mars .
  • Two Armenians Injured in Egypt Knife Attack

    Two Armenians Injured in Egypt Knife Attack

    Security has been boosted in resorts around the country, as the tourism industry provides Egypt with much-needed revenues. It also said the attacker had swum from a nearby public beach to access the holiday resort.
    Nokia 3 Now Available At Zero Percent Interest Loan

    Nokia 3 Now Available At Zero Percent Interest Loan

    Nokia 6 will be sold exclusively on Amazon India and will be available only to those users who register themselves for the sale. A Chinese tipster has just leaked out the complete list of Nokia smartphones HMD Global has chose to launch this year.
    McGregor accused of racism again after 'dancing monkeys' remark

    McGregor accused of racism again after 'dancing monkeys' remark

    Addressing the press McGregor said , "He's in a ******* tracksuit" and added, He can't even afford a suit anymore. After the event, Mayweather was asked by TMZ if he took offense to the remark . "You can't even read! ".
  • Rajnath, Sushma brief opposition on Kashmir

    Rajnath, Sushma brief opposition on Kashmir

    NDA ally Shiv Sena leader Anandrao Adsul said the government need to be more aggressive in dealing with China . Opposition leaders have been critical of the government for its handling of the China and Kashmir issues .
    Sheldon Silver's corruption conviction overturned

    Sheldon Silver's corruption conviction overturned

    He said the reversal reinforces voters" cynicism: "They think, "Of course you can get away with it'". Lawyers for Silver had made the McDonnell ruling a key component of their appeal.
    Ex-US President Jimmy Carter hospitalised

    Ex-US President Jimmy Carter hospitalised

    Carter had been volunteering with a project to build 150 homes in cities throughout Canada with Habitat for Humanity. He later sent a message to the charity saying he was fine, that everyone should stay hydrated and keep on building.


Popular

Man killed 4 missing men, burned their bodies at Bucks County farm
Authorities had charged DiNardo earlier this year with having a gun despite an involuntary mental health commitment. Dinardo told police that when they exited the property he shot Meo in the back, who fell to the ground screaming.

Man Utd: Zlatan Ibrahimovic could stay at Old Trafford - Jose Mourinho
We wanted to be honest and open and give everything for him to make a decision, in case his desire was to leave. He was not happy in the way he finished season.

United States expected to say Iran still abiding nuke deal
But the International Atomic Energy Agency, the United Nations agency that is monitoring the nuclear deal, has said Iran is broadly in compliance.

Erdogan: EU not indispensable, wasting Turkey's time
Their detention raised alarm internationally, increasing fears that freedom of expression was being suppressed under Erdogan . But one year later, many are disheartened by how things have panned out. "The EU is not indispensable for us".

Ben Affleck & Lindsay Shookus Can't Contain Their Smiles After Pizza Date
A month after his last appearance in " SNL ", they were reportedly seen flirting at "The Heat" premiere afterparty in NY . The 44-year-old Oscar-winning filmmaker and the 37-year-old Saturday Night Live producer "full-on had an affair".

Trump condemns terrorist attack on Amarnath pilgrims
This is the reason why prominent Hindu places of worship, and worshippers visiting them, are deemed completely safe from attacks . The bodies of those killed were flown to New Delhi on their way to the pilgrims' west Indian states of Gujarat and Maharashtra.

Corrupt former Federation Internationale de Football Association official Chuck Blazer dies aged 72, lawyer confirms
At one point, Chuck had a $6,000 a month apartment at Trump Tower, exclusively for his cats, reports The Washington Post . Soccer was a comment in a news conference by national team coach Bruce Arena .

Virat Kohli Posts Wrong Image While Congratulating Mithali Raj
Kohli wrote: "A great moment for Indian Cricket, Mithali Raj becomes the highest run scorer in Women's ODI Cricket History today". Australia was much improved in their game against India on Wednesday, turning around a poor bowling performance against England.

Chinese Hospital: Health of Ailing Dissident Failing
Bao, who has been kept under various degrees of house arrest for decades, said by telephone. What they care about is not Liu's treatment, but transferring him overseas .

International Olympic Committee to award Olympics 2024 and 2028 to Paris and Los Angeles
Should there be no three-way agreement, the vote at the Lima session would be a straightforward selection of only the 2024 host city.