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Will the Fed cut interest rates? A new signal is coming

2024-03-04

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This week, Federal Reserve Chairman Powell will attend a congressional hearing on the semi-annual monetary policy report, and the U.S. Department of Labor will release the February non-farm payrolls report, attracting market attention.

Last week, the S&P 500 Index and the Nasdaq Composite Index hit new all-time highs, with the S&P 500 Index closing above 5,100 points for the first time. This week, the market continues to focus on U.S. stock earnings reports and the prospect of the Federal Reserve cutting interest rates.

Market focuses on U.S. non-farm payrolls data for February

On Friday (March 8) local time, the U.S. Department of Labor will release the U.S. non-farm employment report for February.

The January non-agricultural report showed that non-farm employment surged by 353,000 more than expected, higher than all analysts expected, and the number of jobs in December 2023 was revised upward to 333,000 from the previous 216,000. The once again hot labor market means that the U.S. economy is still resilient, and the timing of the Fed's interest rate cut may be delayed.

After the release of non-agricultural data, the swap market showed that bets on the Federal Reserve's interest rate cut in March have declined, and it is no longer fully priced in the Federal Reserve's interest rate cut in May.

It should be noted that as the preferred inflation indicator of the Federal Reserve, the PCE price index released last week rebounded month-on-month, hitting the largest increase since April 2023, further showing price pressure.

FOMC Permanent Voting Committee and New York Fed President Williams said in a recent public speech that there is no need for the Federal Reserve to further tighten policy, and there is still a "long way to go" to achieve the 2% inflation target. Cutting interest rates three times this year is "a long way to go." A suitable starting point”.

Powell will testify before the U.S. House of Representatives and Senate from Wednesday to Thursday local time. According to media reports, with the CPI rebounding more than expected in January and the core PCE rebounding month-on-month, the Federal Reserve’s handling of inflation has become the focus of questions from members of Congress. Industry insiders pointed out that given that the new PCE price index shows continued inflationary pressure, Powell is expected to continue to send a hawkish signal that he is not in a hurry to cut interest rates.

OPEC+ announces extension of voluntary production cuts

OPEC+ representatives said on Sunday that OPEC+ agreed to extend voluntary production cuts until the end of the second quarter. According to statements from several member countries, the total nominal production reduction is about 2.2 million barrels per day.

According to statistics, Saudi Arabia's daily voluntary production reduction is 1 million barrels, Russia is 471,000 barrels, Iraq is 220,000 barrels, the United Arab Emirates is 163,000 barrels, Kuwait is 135,000 barrels, Algeria is 51,000 barrels, Oman is 42,000 barrels, and Kazakhstan is 82,000 barrels. According to estimates, since 2022, the total production reduction committed by OPEC+ is approximately 5.86 million barrels per day, equivalent to 5.7% of global daily demand.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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