Many investors are expressing difficulty in trying to interpret signals from the Fed on inflation. According to Reuters, investors are struggling to figure out how hot officials will let inflation run before they begin unwinding pandemic-era monetary stimulus. However, experts say it’s a good time to buy the dip. Precious metals, like gold and silver, are seeing a comeback this week, with gold holding steady during Thursday’s job report.
Analysis: Fed’s mixed messages on inflation unsettle investors
Investors have been struggling to interpret signals from the Federal Reserve about how hot it is willing to let inflation run before it begins unwinding pandemic-era monetary stimulus.
Measures of markets’ U.S. inflation expectations hit multi-year highs in mid-May, but fell after comments from some Fed speakers and minutes from the committee’s April meeting sounded more hawkish.
Some investors interpreted that as policymakers having a lower tolerance for an inflation overshoot than previously estimated.
The fall in inflation expectations was exacerbated by the central bank’s policymaking meeting on June 15-16, when the Fed pulled forward projections for its first two rate hikes into 2023. Since then, bets on inflation have nudged back up, likely helped by Fed Chair Jerome Powell’s insistence on Tuesday that the bank would not preemptively raise rates because of the “fear” that inflation may be coming.
The choppiness suggests investors are struggling to make sense of the sometimes conflicting signals from Fed officials, who are facing their first inflation test under a new flexible average inflation framework adopted in 2020.
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CNN Politics/Stephen Collinson
Why the infrastructure deal is so important for Joe Biden
President Joe Biden will validate a foundational pillar of his presidency on Thursday — a quest to court Republicans across Congress’ poisoned divides — if he signs off on a hard won bipartisan infrastructure deal.
Biden’s patience seems to have delivered a Senate compromise on the issue that would cut against the prevailing stalemate on Capitol Hill. A parallel and exhaustive set of talks on police reform in the wake of the George Floyd murder last year also faces an end-of-day test seen by key players as crucial ahead of a looming Senate recess.
Senators emerged from another marathon infrastructure negotiating session on Wednesday, declaring they had sealed a framework of an agreement worth around $1.2 trillion with $559 billion in new spending, and planned to discuss it on Thursday with Biden, whose team was briefing him on it Wednesday night.
“I think it’s going to be positive,” said Sen. Jon Tester, a Montana Democrat.
Keep reading, here.
Kitco News/Neils Christensen
Gold price holding steady as U.S. weekly jobless claims fall less than expected
Positive momentum in the U.S. labor market is starting to stall as more American workers than expected apply for first-time unemployment benefits, Kitco News reports.
For the third consecutive week, weekly jobless claims missed expectations. Thursday the U.S. Labor Department said that weekly jobless claims fell by 7,000 to 411,000, down from the previous week’s unrevised estimate of 418,000 claims.
The latest labor market data was disappointing as consensus forecasts looking for claims to rise to 382,000.
The latest employment data is not having much impact on the gold market. August gold futures last traded at $1,784.40 an ounce, up 0.06% on the day.
The four-week moving average for new claims – often viewed as a more reliable measure of the labor market since it flattens week-to-week volatility – rose to 397,750 an increase of 1,500 claims from the previous week.
Continuing jobless claims, which represent the number of people already receiving benefits, were at 3.390 million during the week ending June 12, down by 144,000 from the previous week’s revised level.
“This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000,” the report said.