Similar conversations with Canada PM were not as positive in the morning, but as the day comes to a close, it is being reported that Canada was also give a reprieve for 30 days on tariffs. In return, Canada PM Trudeau promised to spend $1.3B on border security and appointed a Fentanyl czar. It was good enough for a similar 30 days reprieve.
Despite the China tariffs and the EU threat, what was feared to be the start of a trade war, ends as a big "nothing burger" after all.
While acknowledging that the U.S. economy has been in a strong position, with a labor market near full employment, Collins emphasized that more work is needed to lower inflation. The Fed would likely view one-time price level increases through a broader lens and maintain a patient and cautious approach, given the softened trend in inflation. Collins reiterated that there is no urgency to change or lower rates, although some normalization of rates could occur over time.
Atlanta Fed Pres. Bostic had his monthly podcast where he covered a number of different topics. Bostic discussed the increasing uncertainty in the economy, highlighting that tariffs are contributing to this uncertainty and making it challenging to incorporate them into economic models. He stressed the importance of consulting with business contacts and considering various potential outcomes due to the rapidly changing economic landscape. Bostic reaffirmed that the Fed's primary focus remains on inflation, with the goal of reducing it to 2% to maintain the institution’s credibility. He also noted that the U.S. labor market can support a tighter labor market than previously thought, and the outlook for inflation and housing inflation is expected to continue falling, with a solid job market persisting.
Additionally, Bostic mentioned that businesses are currently not confident in their outlook and are taking a wait-and-see approach. While businesses expect to pass on the cost of tariffs, pricing power is reportedly declining. Bostic stated that he does not expect enough clarity by March to justify a change in interest rates and that further rate cuts would depend on seeing a slowdown in the housing market.
US stocks closed lower but off the lowest levels:
Dow Industrial Average fell -122 points of 00.28%S&P fell -45 points of r-0.76% Nasdaq was the worst performer with a decline of -236 points or -1.20%. The Rusell 2000 of small cap stocks also fell sharply with a fall of -1.26% on the day.In the US debt market, yields ended modestly lower. Gold closed at a new record high at 2814.13 and Bitcoin recovered from a low at $91550 to a high back above $100K at $102,569.
This article was written by Greg Michalowski at www.forexlive.com. Read More Details
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