US central bank’s hawkishness reiterated

🤑US central bank’s hawkishness reiterated💸

North American equities started August in the red territory after posting their best month since 2020 in July. The hawkish comments from the US central banks official on the need for higher interest rates to tame inflation pushed both US Treasuries and stocks lower. S&P 500 and Nasdaq dropped 0.67% and 0.16% respectively and Canada’s S&P/TSX declined 0.95%.

Investors were beginning to speculate that considering weak economic data, mostly post Russia-Ukraine conflict, US Federal Reserve’s officials may change their tone and pivot their policy. Markets still anticipate another one percent rate hike in the US and probably in Canada by Yearend to 3.5%. 

The undesirable economic data, however, continues to roll out. Recent data shows the US job openings fell to a nine-month low in June, a sign of lowering demand for labor. Last month, giant tech companies like Apple and Microsoft implied that they are slowing the pace of hiring. Canada’s economy showed no growth in May, which was better than the -0.2% economists expected. 

On the currency side, the US dollar continues to hold its firm ground against other major currencies, with the Japanese yen being the worst performing Year to date. US dollar stands at 1.29 against the Canadian dollar.