This Thursday it was reported that the United States Department of Labor indicated that jobless claims rose to their highest level in three months, while the producer price index showed a sharp slowdown in April to a rise of 0.5% from 1.6% the previous month.
In the 12 months to April, the PPI rose 11% after accelerating 11.5% in March and above an estimated rise of 10.7%.
After the Fed raised its overnight interest rate by 50 basis points last week, the biggest hike in 22 years, investors are trying to gauge how aggressive the central bank will be. “Expectations are fully priced in for another hike of at least 50 basis points at the central bank’s June meeting,” according to CME’s FedWatch tool.
Ireland’s central bank governor Gabriel Makhlouf has joined a chorus of European Central Bank policymakers calling for action to tackle inflation, though not necessarily at the same pace as the Fed.
Risk assets were under pressure for most of the year, with the S&P 500 about to confirm that it is in a bear market, commonly seen as a 20% drop from its all-time high.
Investors sought safe-haven assets such as the dollar as concerns grew about the Fed’s ability to control inflation without causing a recession, as well as fallout from the war in Ukraine and rising Covid-19 cases in the United States. China.
Another safe haven, the yen, strengthened 1.47% to 128.08 per dollar, while sterling traded down 0.63% to $1.2173, after a flurry of weak economic data in United Kingdom.