Here are the top five things you need to know in financial markets on Wednesday, August 31:
1. Fedspeak flow continues to point to hike
Comments from Federal Reserve (Fed) officials continued on Wednesday with the balance of remarks leaning more towards the hawkish camp.Boston Fed president Eric Rosengren suggested on Wednesday that the U.S. central bank would soon reach its goals on employment and inflation and suggested that a faster increase in interest rates could help stave off risks to the economy.In a more dovish stance, Chicago Fed chief Charles Evans said he was concerned that U.S. economic growth has slowed permanently, suggesting that interest rates could remain low for a prolonged period. However, Evans noted that the Fed could normalize policy much faster than currently envisioned and still be able to keep the pace gradual enough to avoid a disorderly change in financial conditions.Minneapolis Fed president Neel Kashkari will deliver a speech about the role of the Fed at 12:00GMT, or 8:00AM ET.Fed fund futures priced in the possibility of a rate hike for the September meeting at 27%, while odds for a move in December were 55.4%, according to Investing.com’s Fed Rate Monitor Tool.
2. U.S. 10-year yield on track for biggest monthly gain in more than a year
Increasing odds for the Fed to hike rates this year had pushed the yield on the benchmark sovereign bond to its largest monthly gain in more than a year.10-year U.S. Treasury yields traded near 1.58% on Wednesday, bringing the rise in August to 12 basis points, the most since June 2015.
3. ADP employment change to give preview for Friday’s jobs report
While not viewed as a reliable guide for the government jobs report due on Friday, the ADP employment change for August will give guidance on private-sector hiring.Consensus is expecting the U.S. economy to create 175,000 jobs in the ADP release, slightly less the 178,000 private nonfarm payrolls estimated for Friday’s official employment report.There is also Chicago PMI data for August at 13:45GMT, or 9:45AM ET, and a report on pending home sales in July at 14:00GMT, or 10:00AM ET.
4. Gold near 2-month low, dollar near 3-week high while waiting for jobs data
Gold prices struggled near a two-month low while the dollar held near a three-week high on Wednesday, as investors looked ahead to upcoming U.S. data to gauge if the world’s largest economy is strong enough to withstand a rise in borrowing costs in the coming months.Gold for December delivery on the Comex division of the New York Mercantile Exchange inched forward 45 cents, or 0.03%, to trade at $1,316.95 by 9:59AM GMT, or 5:59AM ET.The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slipped 0.03% at 96.02 by 10:01AM GMT, or 6:01AM ET, just off the three-week high of 96.12 hit overnight.
5. Oil drops on bearish bets for U.S. stockpiles
Oil prices fell sharply during European hours on Wednesday, touching a two-week low and with West Texas dropping briefly below $46 a barrel as market players awaited fresh weekly information on U.S. stockpiles of crude and refined products.After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories increased by 942,000 barrels in the week ended August 26.The U.S. Energy Information Administration will release its weekly report on oil supplies at 14:30GMT, or 10:30AM ET, amid expectations for an increase of 921,000 barrels.In early North American trade, oil prices had pared earlier losses. U.S. crude oil futures fell 0.28% to $46.22 at 10:02AM GMT, or 6:02AM ET, while Brent oil lost 0.55% to $48.46.
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