Mixed Macro Data Has Raised Uncertainty Around Timing Of Fed’s Rate Cuts

Sensex opened higher today, while other Asian stocks are trading lower.

Sonal Badhan,

Economist,

Bank of Baroda

Mumbai, February 26, 2024: Durable goods orders in the US fell by (-) 6.1% in Jan’24 versus est.: (-) 4.5% decline, and down from (-) 0.3% in Dec’23. This was largely led by (-) 58.9% decline in civilian aircraft orders. However, core capital goods orders (non-defence excl aircrafts) rose by 0.1% in Jan’24, following (-) 0.6% decline in Dec’23, supported by orders for computers, electronic products, appliances, and electrical equipment. US conference board consumer confidence data showed that sentiment fell in Feb’24 to 106.7 from 110.9 in Jan’24. This was driven by dip in both present situation and expectations index. Mixed macro data has further raised uncertainty around the timing and quantum of Fed’s rate cuts. PCE data is awaited for more guidance. 

• Global indices ended mixed. Dow Jones gave up gains and closed lower as investors cued in on the monthly PCE which is Fed’s preferred inflation gauge. Nikkei ended flat. Shanghai Comp advanced ahead of the key manufacturing PMI reading. Sensex also ended in green pushed by gains in real estate and consumer durable stocks. It opened higher today, while other Asian stocks are trading lower.
• Global currencies ended mixed. Dollar was steady as investors awaited for fresh cues. US Durable goods order declined at a much faster pace than anticipated (-6.1% vs est.: -4.5%). Yen strengthened amidst news of sticky inflation and raised expectation of possible pivot by BoJ. INR ended flat. It is trading at similar levels today, while other Asian currencies are trading mixed.
• Except China, other global 10Y yields edged higher. Investors are expecting stronger US PCE data, due later this week. However, the gains in US treasury yield were limited by weakness in production and consumer confidence data. India’s 10Y yield rose by 1bps, as oil prices inched up. However, it is trading a tad lower today at 7.06%.

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