April 28, 2023
United States:
Inflation Gauge Watched by Fed Shows Prices Still Rising While Consumer Spending Stalls
Two key gauges showed persistent US inflation pressures in recent months, buttressing the case for another Federal Reserve interest-rate hike next week.
The personal consumption expenditures price index excluding food and energy, the Fed’s preferred measure of underlying inflation, rose 0.3% in March from the prior month and 4.6% from a year earlier, a Commerce Department report showed Friday.
Europe:
Euro Bears Warn Market Is Ignoring Risk of Another Energy Crisis
A growing body of contrarians has a warning for the market majority betting on a continued euro rally: the energy crisis that sent the common currency tumbling last year is far from over.
Investors and analysts at Vanguard Group Inc. and BlueBay Asset Management LLP argue that high gas prices will continue to put pressure on the euro-area trade balance. Others forecast that the currency could fall back toward parity with the dollar from $1.10 currently.
Asia:
Hong Kong Runs Down Liquidity Buffer With Little Impact on Rates, For Now
Hong Kong is burning through a closely-watched component of its monetary base to ward off attacks on its dollar to little avail, with the lack of reaction in money markets likely to keep the pressure on the beleaguered currency.
The city’s aggregate balance — a gauge of interbank liquidity — has halved this year without driving local borrowing costs higher, the traditional mechanism for reversing weakness in the Hong Kong dollar. While the currency is pegged to the US dollar, the city’s one-month rates still trail their American counterparts by some 170 basis points, setting up a sweet spot for so-called carry traders.
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