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The US Treasury auction for the six weeks ending August 25th yielded a winning bid of 3.65%, unchanged from the previous week.August 25th - According to Iranian sources on the 25th local time, a source close to the Iranian negotiating team stated that Iran hopes to clearly convey its position and negotiating conditions regarding the Strait of Hormuz to the United States through Pakistan. The source said that during a meeting with visiting Pakistani Army Chief of Staff Mohammad Munir on the 24th, Iran clearly explained its position to Pakistan. Irans conditions include the United States complying with the Islamabad Memorandum of Understanding and fulfilling its relevant provisions, with Article 5 concerning Irans arrangements for the management of the Strait of Hormuz. The source indicated that Pakistan is seeking to convey these conditions to the United States.August 25th - Honda Motor Co. is considering building a new plant in the United States. As the company plans to expand its lineup of gasoline-electric hybrid vehicles starting in 2030, a senior executive at the Japanese automaker stated that the company needs to further increase production capacity. This plan comes after Honda made a broader strategic shift earlier this year, when it canceled plans to launch three all-electric models for the U.S. market. Honda plans to launch 15 new hybrid models by March 2030, primarily targeting the North American market. A Honda executive vice president stated, "To meet customer demand, we do need to increase production capacity. The next production plant should be located in North America."On August 25th, Federal Reserve Chair Janet Collins stated that she currently supports maintaining interest rates, but this stance depends on seeing further progress in inflation declining and gradually moving towards the Feds 2% target. Collins wrote, "To maintain the current target range for the interest rate, we need to continue to see evidence that inflation is indeed declining. If this evidence of a sustained decline in inflation does not emerge, I think monetary policy should be tightened as soon as possible." She stated that recent inflation data showed underlying price pressures were moderate, which was "somewhat encouraging," but added that monthly data could be volatile. "Whether the recent improvements can be sustained remains to be seen." Collins said that tighter interest rates, coupled with rising long-term yields, should alleviate some of the inflationary pressures from strong household and business consumption. She added that the impact of previous tariffs is expected to have largely subsided, and the impact of rising oil prices on inflation should also begin to weaken.Canadian Finance Minister: U.S. tariffs will have a real impact on Canada, and we must respond.

Hang Seng Index, ASX200, Nikkei 225: The Markets Respond to the Fed

Cory Russell

Feb 02, 2023 16:15


Market Snapshot

The morning session was upbeat as the Asian equities markets reacted to the Fed's overnight interest rate rise and Powell's news conference. The Fed increased interest rates by 25 basis points to 4.75%, as anticipated. The action put Fed Chair Powell in charge of market risk sentiment, bolstering the Hang Seng Index's positive opening.


Support came from a favorable view of the economy, the state of the job market, and the prognosis for monetary policy. While conceding that the disinflationary process has begun, Fed Chair Powell said the Fed might deliver a couple more rate rises to return inflation to its objective.


The Fed Chair said that there wouldn't need to be "a major downturn, or a very large rise in unemployment" for the Fed Funds Rate to remain below 5% and achieve the inflation objective.


Despite Fed Chair Powell's upbeat prognosis, the US ADP nonfarm job change and ISM Manufacturing PMI statistics underperformed, casting doubt on the economy's prospects.

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