January 27, 2023
United States:
Fed Sees Soft Landing as Silver Lining of Temp Jobs Decline
The recent decline in temporary jobs — often a harbinger of recession — is actually raising hopes among Federal Reserve policymakers that their bid for a soft landing is working.
The number of US temp workers fell for the fifth straight month in December from a record high in July. The drop is being viewed as an indication that the Fed is making progress in its bid to ease a taut jobs market just enough to head off inflationary wage increases without triggering widespread layoffs.
Europe:
ECB Seen Delivering Two Half-Point Rate Hikes on Way to May Peak
Back-to-back interest-rate increases of 50 basis points are approaching from the European Central Bank, whose battle with persistent inflation will see it hike borrowing costs until May, according to a Bloomberg survey of economists.
Respondents expect the deposit rate to then be held at 3.25% for about a year — until a souring economy brings about a series of quarter-point cuts, kicking off in June 2024.
Asia:
Hong Kong Dollar Pessimists Stage a Comeback
Bearish bets on the Hong Kong dollar are gaining traction as a slump in local borrowing costs dulls the appeal of the currency versus the greenback.
The Hong Kong dollar has fallen nearly 1% from an 18-month high in December. That’s because the city’s one-month interbank borrowing rate slid, widening its gap with the US equivalent by the most since 2008. The large spread makes it lucrative for traders to borrow Hong Kong’s currency cheaply and sell it against the higher-yielding greenback.
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