The stock markets Global stocks traded cautiously on Monday as optimism about an early U.S. interest rate hike was tempered by concerns about rising tensions in the Middle Eastwith the prices of oil rising by more than 1.5%.
The futures of the US stocks were a little firmer, while European stocks weakened a bit, with trading subdued as the London market was closed for a public holiday in the UK.
Meanwhile, the exchange of rocket salvos and airstrikes on Sunday between Israel and Hezbollah, raised fears of possible disruptions to oil supplies if the conflict escalated. Crude oil prices have therefore Brent U.S. crude prices rose more than a dollar, or 1.5 percent, with Brent trading at $80.35 a barrel, a sign of some concern among investors.
It’s time for the Fed to ease up
In a highly anticipated speech at the symposium of Jackson Hole On Friday, the head of the United States Federal Reserve (Fed), Jerome Powell, He said the time had come to start easing policy and stressed that the central bank did not want to see further weakening in the labor market.
Also speaking in Jackson Hole, the chief economist of the European Central Bank, Philip Lane, took a more cautious stance at the weekend, saying the central bank was making “good progress” in bringing euro zone inflation down to its 2% target but that success was not yet assured.
“If you compare the Fed to the ECB, the Fed is more focused on the labor market and whether it has tightened policy too much,” said David Kohl, chief economist at Julius Baer in Frankfurt. “The ECB is not yet the same.”
Differences between European and American bonds
A contrast between the perspectives of the rates of USA and the area of euro was developing in the markets of government bondswith euro zone bond yields rising slightly on Monday after Lane’s comments, while U.S. dollar yields Treasury bonds US Treasury bond yields fell. The yield on two-year US Treasury bonds fell 2 basis points (bp) to 3.89%.
The futures of the federal funds They already have a quarter-point cut priced in at the Sept. 18 meeting, and imply a 38% chance of a 50-basis-point move. The market also has 103 basis points of easing priced in for this year and another 122 basis points in 2025.
The ECB has already begun cutting rates, with a 25 basis point reduction in July, and two further quarter-point cuts planned by the end of the year.
Source: Ambito
