(Bloomberg) — US stocks pared lower after San Francisco Federal Reserve President Mary Daley warned that excessive tightening could be “unnecessarily painful” for the economy.
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The S&P 500 and Nasdaq 100 are down, but are far from session lows. The Walt Disney Company defied the risk-off sentiment that swept the markets by bringing back former chief executive Bob Iger to replace his successor, Bob Chapek, as CEO.
Oil futures trimmed losses after Saudi Arabia denied a report that it was discussing increasing oil production at the OPEC+ meeting next month. The dollar rose as investors sought safe-haven assets. Treasury bonds pared gains.
China saw its first Covid-related death in nearly six months on Saturday and two more cases were reported on Sunday. And the worsening outbreak of the disease across the country fuels fears that the authorities may again resort to strict restrictions. Lockdowns could have a negative impact on supply chain dynamics and potentially exacerbate inflation problems across economies.
Read more: Oil prices fell after the issuance of a report that Saudi Arabia is discussing an increase in OPEC
This week, traders will also look to the minutes from the latest Fed policy meeting for more clues on the path of rate hikes. Daley said officials should be aware of the delays in transmitting monetary policy through the economy as they raise interest rates further in order to bring down inflation.
“For the Fed right now, if we get some deceleration in inflation — which it looks like we might do — but you don’t see that in services inflation deceleration, that’s related to a tight labor market,” Veronica Clark, economist at Citigroup, said on Monday. on Bloomberg Television. “You need to see this downturn in labor market data.”
While many central bank officials in recent days have reiterated their intention to continue raising interest rates, they differ on which way they will go about it. Atlanta Federal Reserve Chairman Rafael Bostick said he favors slowing the pace of interest rate increases, with increases not going more than one percentage point, in an effort to ensure a soft landing in the economy. Boston Fed Chair Susan Collins reiterated her view that options are open for the size of the December rate hike, including the possibility of a 75 basis point move.
Main events this week:
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US Richmond Fed Manufacturing Index, Tuesday
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The Organization for Economic Co-operation and Development releases economic forecasts, Tuesday
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Fed’s Loretta Mester and James Bullard speak, Tuesday
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S&P Global PMIs: US, Eurozone, UK, Wed
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US Mortgage Applications, Durable Goods, Initial Jobless Claims, University of Michigan Sentiment, New Home Sales, Wednesday
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Minutes of the November Federal Reserve meeting. 1-2 meeting, Wed
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The European Central Bank publishes a report on its October policy meeting, Thursday
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US stock and bond markets are closed for the Thanksgiving holiday, Thursday
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US stock and bond markets close early on Friday
Some of the major movements in the markets:
Stores
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The S&P 500 was down 0.2% as of 1:14 p.m. New York time.
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The Nasdaq 100 fell 0.9%.
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The Dow Jones Industrial Average changed little
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The MSCI World Index rose 0.6%.
currencies
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The Bloomberg Dollar Spot Index rose 0.7%.
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The euro fell 0.8 percent to $1.0244
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The British pound fell 0.7 percent to $1.1811
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The Japanese yen fell 1.2 percent to 142.05 per dollar
Digital currencies
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Bitcoin fell 1.6% to $15,986.9
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Ether fell 3.5 percent to $1,101.81
bonds
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The yield on the 10-year Treasury fell 2 basis points, to 3.81%.
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Germany’s 10-year yield fell 2 basis points to 1.99%.
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The UK 10-year yield fell five basis points to 3.19%.
goods
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West Texas Intermediate crude fell 0.6% to $79.59 a barrel
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Gold futures fell 0.8 percent to $1,754 an ounce
This story was produced with help from Bloomberg Automation.
— With assistance from Isabelle Lee, John Viljoen, and Katrina Saraiva.
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