yield on US bonds continues to rise

Statements by members of the US Federal Reserve during the week

unscheduled events

The markets concluded last week with the US and Canadian labor market data on Friday, turning the attention towards a new week full of economic data and events with the beginning of Monday the 11th of October, as the US markets will be on an official holiday on the occasion of Columbus Day, while the Canadian markets celebrate Thanksgiving.

A quick look at the most important events of the past week

The Reserve Bank of Australia announced its monetary policy last Tuesday in the Asian session, where the meeting came in line with market expectations of no change in monetary policy and interest rates.

The Reserve Bank of Australia announced no change in monetary policy – Fayez Al-Ajmi (fayezalajmi-4x.com)

In the Asian session, the PMI index issued by the Institute of Supply Management for the American service sector showed a growth and rise to 61.9% in September, compared to 61.7% in August, to come better than expectations that indicated a rise to 59.9%, to record economic activity in the services sector growth for the sixteenth consecutive month .

In the Asian session on Wednesday, the markets witnessed a meeting of the Reserve Bank of New Zealand, which raised interest rates by a quarter of a point, as markets had expected New Zealand to raise interest rates by a quarter of a point as expected – Fayez Al-Ajmi (fayezalajmi-4x.com)

In the American session, we followed the private sector employment data released by the ADP in preparation for the US labor market data by the end of the week, the US private sector added 568,000 jobs in September – Fayez Al-Ajmi (fayezalajmi-4x.com)

The markets concluded the week on Friday, the eighth of October, with the NFP employment data, which was mixed, in addition to employment data from Canada. The American economy added 194 thousand jobs in September and jobs in Canada exceeded expectations – Fayezalajmi-4x.com

The general index of the US dollar closed the weekly session stable, close to the weekly opening prices at 94.07, with a slight increase of about 0.05%, and it is trading on Monday morning with the opening of the European markets at 94.08 levels.

On the other hand, the yield on US Treasury bonds for ten years is trading at the opening session today, Monday, at its highest level since last May, at 1.612, up by 0.42%.

This week’s main events

The markets are awaiting many economic data that will have a direct impact on currency movements, the most important of which is the US inflation data, which will be released next Wednesday, in addition to the issuance of the minutes of the FOMC meeting of the September meeting and some sporadic data during the week. US inflation data After the US labor market data, even if it was mixed, it did not cause the markets to decline expectations of the US Federal Reserve’s announcement to reduce bond purchases next November.

Therefore, inflation data will be another important event that the US Federal Reserve is watching, but the US Federal Reserve expects inflation to rise temporarily for reasons that it has clarified more than once.

A rise in inflation rates is not expected to cause concern in the markets unless it comes as a strong surprise. Expectations indicate that the monthly rate of the consumer price index (CPI), which measures inflation, will remain stable in September at 0.3%, and that the core index, excluding food and energy prices, will rise to 0.2%.

US Federal Reserve minutes Also in the American session, Wednesday, the minutes of the US Federal Reserve meeting held last September will be announced, as the minutes of the meeting are always issued two weeks after the meeting.

The US Federal Reserve had unanimously kept interest rates unchanged at the current levels of 0.25% as expected, and the bank announced that it would continue its program to purchase assets from Treasury bonds with at least $80 billion per month and $40 billion in mortgage-backed securities.

The markets will explain the minutes of the meeting, especially after half of the committee members raised their expectations of raising interest rates in the next year 2022 in the economic outlook report.

unscheduled With the exception of the economic data scheduled for this week, we will have some topics that may raise the appetite for risk in the markets or reduce it during the week, the most important of which is the issue of the US debt ceiling and the tension in Congress between the two parties Markets will also be watching what US President Joe Biden does regarding the reappointment of US Federal Reserve Chairman Jerome Powell.

The Chinese Evergrande crisis, in turn, has not ended on any of the markets, despite the decline in its title in the main, but investors will also monitor what the situation will end up with.

Federal members’ statements During the week’s sessions, we will monitor the statements of several members of the US Federal Reserve, where Bostic, Clarida and Evans will speak tomorrow, Tuesday, followed by statements by member Brainard on Wednesday, Barkin on Thursday, and Williams on Friday, and therefore any statements regarding inflation expectations or the withdrawal of liquidity in November may have a direct impact on the movements.

Miscellaneous data that we will monitor during the week

Tomorrow, Tuesday, the markets will have a date with the ZEW index, which measures economic confidence in Germany and the eurozone. Wednesday in the European session we will watch the UK’s growth, trade balance and manufacturing production data – in the US session CPI data will be released from the USA and later in the session the US Federal Reserve minutes will be announced.

Thursday in the Asian session, we will monitor the Australian labor market data (change in employment and unemployment rate), while we will monitor the PPI or producer price index and weekly unemployment benefits from the United States of America in the American session.

In the last sessions of this week, Friday, we will monitor the US retail sales index, in addition to the preliminary reading of US investor confidence from the University of Michigan.