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Federal Reserves Schmid: Leverage levels in technology investments are worth discussing.Japans final composite PMI for July was 52.7, compared to 53.1 in the previous month.Japans final services PMI for July was 51.2, down from 51.9 in the previous month.On August 5th, Federal Reserve Chairman Schmid stated, “Our inflation problem isn’t just about energy. Energy-excluding inflation remains well above 2%, revealing an underlying trend in the data. This trend is not favorable for us. For the six months prior to June, monthly energy-excluding inflation consistently rose above the level needed to achieve our inflation target. Over the past 12 months, energy-excluding inflation has been 3.2%, about 0.5 percentage points higher than in June of last year. Inflation has been persistently excessive across a broad and expanding range of goods and services. Many factors are driving inflation. Reading economic commentary reveals that recent focus has been on supply shocks. These shocks include negative supply factors related to shipping disruptions, oil, and tariffs, all of which have pushed up prices. I am quite cautious about this commentary and oppose the tendency to attribute our inflation problem solely to supply shocks. While supply is indeed a problem for some commodities, inflation is always the result of the combined effects of supply and demand, and the balance between them.”On August 5th, Federal Reserve Chairman Schmid stated, "When examining the economy, my focus is entirely on inflation, which remains excessively high. The Fed defines price stability as an inflation rate of 2%. Why 2%? Because this level seems just right, not having a substantial impact on the day-to-day decisions of households and businesses. However, while the latest inflation data for June showed encouraging signs of a slowdown, it is too early to rely too heavily on a single data point relative to recent trends. Volatile oil prices both pushed up inflation in the previous months and played a significant role in the June pullback. With oil prices rising again, it remains uncertain whether any relief on the energy front will be sustainable."

As the BoJ ponders a YCC expansion, EUR/JPY continues to decline, falling below 142.60

Alina Haynes

Apr 06, 2023 11:52

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After plunging below 142.60 during the Asian trading session, the EUR/JPY pair's three-day losing trend was extended. Renewed rumors of an expansion of the Bank of Japan's (BoJ) Yield Curve Control (YCC) are exerting immense pressure on the cross.

 

The Japanese economy is experiencing gradual wage growth, and inflation is expected to respond to recent increases in crude oil prices. Analysts at Wells Fargo believe the BoJ will take advantage of a tactical opportunity to further modify its policy settings in the fourth quarter of 2022, and are inclined toward a meeting in October. They added that this timeframe is optimal for a smooth policy adjustment, as monetary easing from the Federal Reserve (Fed) and other major central banks should alleviate yield pressure.

 

In particular, the Bank of Japan (BoJ) will raise the target yield for 10-year Japanese government bonds (JGBs) from 0% to 0.25% and increase the tolerance interval surrounding this target to +/- 75 basis points.

 

Accelerating PMIs in the Eurozone provide support for the European Central Bank's sustained rate hikes. (ECB). S&P Global reported a Composite PMI of 53.7 on Wednesday, which was higher than the previous release of 52.0 but below expectations of 54.1, the highest level in the past ten months.

 

According to Reuters, S&P Global issued the following statement: "Manufacturing production increased slightly, but the service sector had the greatest impact on March's accelerated growth."

 

Wednesday, ECB policymaker Boris Vuji stated regarding interest rate forecasts, "The majority of the rate-hiking cycle has passed." He added, "We may require additional rate increases to address core inflation."

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