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As experts in the Stock Market and trading world, we want to provide you with unique insights and valuable information to help you navigate the complex world of Wall Street. Today, we are discussing the Fed’s Hawkish Stance and its impact on economic indicators.
The Fed’s Hawkish Stance and Economic Indicators
Recent statements from Federal Reserve policymakers have indicated a preference for maintaining higher interest rates in the near term. Fed Governor Michelle Bowman has hinted at a willingness to raise borrowing costs if inflation progress stalls, while Fed Governor Lisa Cook has mentioned that rate cuts might be necessary in the future but emphasized caution in case of rising inflation expectations.
The continued strength of the US economy supports this outlook, leading to higher US Treasury yields and limiting potential gains for gold.
“We are not yet at the point where it is appropriate to cut rates,” Bowman stated, reaffirming the Fed’s focus on inflation control.
Inflation and Geopolitical Tensions Provide Some Support
Despite the Fed’s hawkish stance, weaker consumer and producer prices for May have kept the possibility of a September rate cut on the table. In addition, geopolitical tensions in the Middle East and the Russia-Ukraine conflict have provided some support to gold as a safe-haven asset.
The US Consumer Confidence Index declined to 100.4 in June from 101.3 in May, indicating concerns about the economic outlook. Coupled with recent soft retail sales data and signs of easing inflation, there is growing anticipation for a rate cut later this year.
Market Awaits Key Economic Data
Traders are now focusing on upcoming US economic data releases for further guidance. The final Q1 GDP print is scheduled for Thursday, followed by the release of the Personal Consumption Expenditures (PCE) Price Index on Friday.
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