A preview of the day ahead in the European and global markets of Anshuman Daga
Nothing stops the Federal Reserve.
While U.S. employers hired slightly more workers last month than markets had expected, the hot labor market means the Fed’s aggressive monetary policy is here to stay.
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New York Fed President John Williams reiterated on Friday that further rate hikes were needed to bring inflation down.
Futures prices now point to nearly a 90% chance of a 75 basis point rate hike next month and more than 150 basis points of tightening by May.
Concerns about higher borrowing costs sent Asian stocks tumbling on Monday after Friday’s selloff on Wall Street.
Business remains weak, even with China reopening after a week-long hiatus due to holidays in Japan, South Korea and Taiwan.
Asian tech stocks have seen steep falls along with chipmakers, following the latest US crackdown on China’s chipmaking industry to slow Beijing’s technological and military advances.
Analysts are clearly focused on how the Fed can slow a resilient job market.
“What else can the Fed do to slow demand and bring inflation closer to target? How is it reducing job creation?” Rick Rieder, head of BlackRock’s global allocation investment team, asked in a note.
“One wonders at this point whether Fed or government legislation to ban resume software might be the only way to keep recruits from contacting potential employers!”
The jobs data marked the series’ fifth straight print above expectations and its 10th upside surprise in the past 12 months.
This week will be dominated by the annual meeting of the International Monetary Fund and the World Bank where the who’s who of finance and central banking will come to Washington.
While US inflation numbers, retail sales data, consumer confidence gauges and minutes from the latest Fed meeting are also due this week.
Key developments that could influence markets on Monday:
Economic data – house prices in Sweden, consumer prices in Norway and Denmark
LONDON – Speech by Fergal Shortall, Director of Monetary Analysis, Bank of England MPC – 0815 GMT
FRANKFURT – Keynote speech by ECB Chief Economist Philip Lane at the ECB Monetary Policy Conference – 13:00 GMT
CHICAGO, Illinois – Chicago Federal Reserve Chairman Charles Evans speaks on current economic conditions and monetary policy – 13:00 GMT
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Reporting by Anshuman Daga; Editing by Sam Holmes
Our standards: The Thomson Reuters Trust Principles.