The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0619 GMT - A strong U.S. economy faces signs of a weakening labor market, as evidenced by recent payrolls and employment creation numbers, and this backdrop supports a wait-and-see approach by the Federal Reserve, KBRA's Joan Feldbaum-Vidra says ahead of the Fed's interest-rate decision. Additionally, normalized oil flows out of the Middle East tend to support medium-term compression of oil prices, although the risk of an escalation in conflict after the U.S. midterm elections are keeping oil prices elevated, the global head of sovereigns says. "Large-scale borrowing by AI companies and the U.S. Treasury are keeping yields high, helping do the Fed's job," she says. (emese.bartha@wsj.com)
0614 GMT - The Federal Reserve's patience should not be confused with complacency, Amundi Investment Institute's Alessia Berardi says. In line with the market, Amundi expects the Fed to keep interest rates on hold on Wednesday. "Admittedly, the labour market now looks less strong and market rates remain high," the head of global macroeconomics and emerging markets strategy says. However, the inflation outlook has not changed, so the Fed still has accommodation to remove, she says. (emese.bartha@wsj.com)
0606 GMT - U.S. inflation remains uncomfortably above the Federal Reserve's 2% target, and based on economic data, another hike would not be unreasonable, says Carmignac's Kevin Thozet in a note. Hence, reasons for the Fed to likely stay on hold Wednesday should be sought elsewhere, the member of the investment committee says. "Financial conditions have tightened, equities have wobbled and stress has appeared at the fringes of credit markets," he says. These factors provide reason for the Fed to pause, without necessarily signaling a shift toward a more accommodative stance, Thozet says.
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