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RSM Chief Economist Joseph Brusueras: Warsh delivered the right hawkish signals at the press conference and attempted to reinforce the Fed’s credibility in restoring price stability, while also enhancing his own credibility.U.S. stocks continued to decline after the Walsh press conference, with the S&P 500 falling 1%, its biggest drop since July 29, the Dow Jones Industrial Average down 1.65%, and the Nasdaq Composite down 0.6%.On September 17th, Federal Reserve Chairman Warsh declined to answer questions at a press conference regarding his interactions with US President Trump. Trump has been calling for lower interest rates in recent months. Warsh stated, "I have no comment on my discussions with the president." White House Council of Economic Advisers Chairman Christopher Phelan said on Tuesday that raising interest rates would be a "mistake."On September 17th, Federal Reserve Chairman Warsh stated that he would not disclose details of future interest rate decisions by the Federal Open Market Committee (FOMC). He said, "I am not responsible for providing forward guidance. Our decision today (to raise interest rates) is a carefully considered, serious, and responsible one. We have been preparing for and thinking about this decision for the past 110 or 120 days." Warsh also stated that this decision was not market-driven. He said, "Our decision today is based on our assessment of the current situation, our judgment of the employment trend, and our assessment of the strength of the economy. Sometimes, the market tries to anticipate our decisions. I watch market prices to see what information the market is sending. But todays decision is our own."On September 17th, Warsh stated that while the Federal Reserve cannot prevent price shocks in commodities such as oil on its own, the central bank can use policy tools to prevent further spread of inflationary pressures. Warsh said, "We cannot influence the price of any single commodity, such as oil or groceries." However, he pointed out, "We can and will ensure that any changes in relative prices do not spread further, and do not have second- or third-order effects on the economy. Thats our responsibility, and thats what were doing." Warsh made these remarks as U.S. diesel prices hit a record high due to the Iran war.

USD/CNH rebounds from 7.3300 despite a strong Caixin Manufacturing PMI

Daniel Rogers

Nov 01, 2022 18:01

 截屏2022-11-01 上午11.37.49.png

 

After falling to roughly 7.3300 during the Tokyo trading session, the USD/CNH pair demonstrated a V-shaped recovery. Despite the release of positive Caixin Manufacturing PMI data, the asset has made a recovery. The economic data came in at 49.2 against predictions of 49.0 and the prior value of 48.1.

 

China's official Manufacturing PMI dropped to 49.2 from 50.0 and 50.1, as anticipated, according to the National Bureau of Statistics (NBS). In addition, the Non-Manufacturing PMI was significantly lower at 48.7, compared to predictions of 51.9 and the last release of 50.6.

 

In the meanwhile, the US dollar index (DXY) in Tokyo has declined significantly as the risk-on sentiment has grown. The DXY has significantly declined to roughly 111.36. S&P500 futures have rallied strongly since Monday's decline due to confidence surrounding the quarterly results season.

 

Despite an increase in hawkish Federal Reserve (Fed) wagers, US government bond returns have dropped. At the time of writing, the yield on the 10-year US Treasury has declined to 4.04%, a decrease of 0.90% from its prior level.

 

This week's major catalyst will be the Federal Reserve's decision on interest rates. As inflationary pressures show no signs of abating, it is anticipated that the US Federal Reserve will hike interest rates by 75 basis points for the fourth time this year (bps). However, consumer spending declined to 1.4% in the third quarter from 2.0% in the previous quarter, which could weigh on the inflation rate.

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