The dollar depreciated against all currencies except against the yen. While preliminary gross domestic product (GDP) growth for the first quarter of 2024 was the slowest in about two years, growth in the core personal consumption expenditure (PCE) index accelerated.
Preliminary GDP for the first quarter was an annualized increase of 1.6% compared to the previous quarter. Growth slowed significantly from the 3.4% increase in the previous quarter, and fell short of the 2.4% growth expected by the market. The core PCE index, which excludes food and energy, which is closely watched by the US Federal Reserve as a price indicator, rose 3.7%, accelerating from the 2.0% rise in the previous quarter.See more
The dollar index fell 0.21% to 105.60. As government bond yields rose after the GDP announcement, the rate at one point rose to 106.00.
The yen hit a new 34-year low against the dollar, and a 16-year low against the euro. Investors are betting that the Bank of Japan’s policy meeting, which runs until Friday, will not be hawkish enough to support the yen.
The dollar/yen exchange rate rose 0.19% to 155.63 yen. After the GDP announcement, the price fell to 155.31 yen, but it soon reversed. At one point, it hit a 34-year high of 155.75.
The euro/yen pair soared to 167.025 yen. Investors are becoming increasingly wary, believing that the 155 yen level is the red line for Japanese authorities, and that the Bank of Japan may intervene if the price is exceeded.
The euro/dollar rose 0.26% to $1.0725. The British pound rose 0.35% to $1.2504.
Bitcoin, a crypto asset (virtual currency), rose 0.80% to $64,492. Ethereum rose 0.94% to $3,158.95.
US bond yields hit the highest level in over five months. Although the U.S. economy’s growth rate was lower than expected in the first quarter, inflation was rising faster.
The US Department of Commerce announced on the 25th preliminary figures for GDP for the first quarter of 2024, showing an annualized increase of 1.6% compared to the previous quarter, which fell short of the 2.4% increase expected by the market. Meanwhile, the core PCE index, which excludes food and energy, which the Federal Reserve focuses on as a price indicator, rose 3.7%, accelerating from the 2.0% rise in the previous quarter.See more
Kevin Gordon, senior investment strategist at Schwab, said the acceleration in inflation was “definitely a surprise.”
Tom Di Galloma, managing director and co-head of global rates trading at BTIG, said PCE data is “something the Fed is monitoring very closely.”
The federal funds (FF) interest rate futures market predicts a rate cut of 35 basis points (bp) by the end of this year. At the end of the 24th, it was 43bp. Interest rate cuts are expected to begin in September or November.
The benchmark 10-year bond yield rose 5 basis points to 4.704%. At one point, it hit 4.739%, the highest level since November 2nd. The two-year bond yield rose 6 basis points to 4.996%. At one point, it hit 5.027%, the highest level since November 14th.
The yield gap between 2-year and 10-year bonds is almost unchanged at -29 basis points.
The U.S. Treasury Department’s $44 billion seven-year bond auction attracted reasonable demand.
The U.S. economic growth rate in the first quarter was the slowest in nearly two years, showing signs of accelerating inflation and increasing expectations that the Federal Reserve will not cut interest rates before September.See more
“GDP definitely destroyed the market’s expectations for stocks in terms of high growth,” said James St. Aubin, chief investment officer at Sierra Mutual Fund. It will lead to.”
Although buying and selling was mixed in response to US GDP statistics, buying became dominant in the final stages, rebounding for the first time in four business days. The settlement price (equivalent to the closing price) of the main contract month, June, was $2,342.50 per ounce, up $4.10 (0.18%) from the previous day.
The crude oil futures rebounded as the risk of supply disruption in the Middle East offset concerns about a slowdown in U.S. demand. The settlement price (equivalent to the closing price) of the June contract for the standard U.S. oil grade WTI was $83.57 per barrel, up $0.76 (0.92%) from the previous day. The July contract rose $0.66 to $82.75.
This is a provisional value based on LSEG data.The previous day’s ratio may not match
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Tags: Market Summary #25th Dollar falls currencies yen yields reach highest level months stocks fall Reuters
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