The Fed will receive one more report on inflation, as well as one more on the US job market, before its next meeting, which ends September 17. The most recent jobs report was a stunner, coming in much weaker than economists expected.
Some economists warn that more twists and turns in upcoming data could make the Fed’s upcoming decisions not so easy. Its twin goals are to get inflation to 2 per cent while keeping the job market healthy, and helping one with interest rates often means hurting the other.
Even Tuesday’s better-than-expected inflation report had some discouraging undertones. An underlying measure of inflation, which economists say does a better job of predicting where inflation may be heading, hit its highest point since early this year, noted Gary Schlossberg, market strategist at Wells Fargo Investment Institute. That helped cause some up-and-down swings for Treasury yields in the bond market.
“Eventually, tariffs can show up in varying degrees in consumer prices, but these one-off price increases don’t happen all at once,” said Brian Jacobsen, chief economist at Annex Wealth Management. “That will confound the Fed and economic commentators for months to come.”
Other central banks around the world have been lowering interest rates, and Australia’s on Tuesday cut for the third time this year.
On Wall Street, Intel’s stock rose 5.1 per cent after Trump said its CEO has an “amazing story,” less than a week after he had demanded Lip-Bu Tan’s resignation.
Circle Internet Group, the company behind the popular USDC cryptocurrency that tracks the US dollar, climbed 2.4 per cent despite reporting a larger loss for the latest quarter than analysts expected. It said its total revenue and reserve income grew 53 per cent in its first quarter as a publicly traded company, and it topped forecasts.
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On the losing side of Wall Street was Celanese, which sank 14.1 per cent even though the chemical company delivered a better profit than expected. It said that customers in most of its markets continue to be challenged, and CEO Scott Richardson said that “the demand environment does not seem to be improving.”
Cardinal Health dropped 7.2 per cent despite likewise reporting a stronger profit for the latest quarter than analysts expected. Its revenue fell short of forecasts, and analysts said the market’s expectations were particularly high for the company after its stock had already soared 33.3 per cent for the year coming into the day.
Critics say the broad US stock market is looking expensive after its surge from a bottom in April. That’s putting pressure on companies to deliver continued growth in profit.
In stock markets abroad, indexes edged up in China after Trump signed an executive order late Monday that delayed hefty tariffs on the world’s second-largest economy by 90 days. The move was widely expected, and the hope is that it will clear the way for a possible deal to avert a dangerous trade war between the United States and China.
Japan’s Nikkei 225 jumped 2.1 per cent, and South Korea’s Kospi fell 0.5 per cent for two of the world’s bigger moves.
In the bond market, the yield on the 10-year Treasury rose to 4.29 per cent from 4.27 per cent late Monday.
The yield on the two-year Treasury, which more closely tracks expectations for the Fed, fell to 3.73 per cent from 3.76 per cent.
