Russia-Ukraine negotiations remained as the positions of both sides remain unchanged.
Fed’s Bullard and Waller support 50-basis point increases to the bank’s benchmark interest rate
Fed’s Kashkari anticipates neutral rates at 2.2% and a reduction in balance sheet at twice the QT.
The price of gold (XAU/USD), fell for the third consecutive week. This is due to mixed market sentiments caused by ongoing talks between Russia and Ukraine, inflation woes and tightening central banks. Investors are still leaning towards safe assets. At the time this article was written, XAU/USD trades at $1929 per troy ounce.
Although market mood has been improving, it is still fluctuating. European equities ended the session in the green while their North American counterparts recorded gains. The greenback is holding its ground, with the US Dollar Index above 99.19, up 0.22% in the day. This is a headwind to the non-yielding metal despite falling US Treasury yields.
Despite hostilities still raging, Russia-Ukraine peace negotiations are continuing. The conflicting signals from both sides suggest that talks are stuck at a mid-point and there is no progress. While Russia reported that Russia and Ukraine were closely aligned in their neutrality position and refusal to join NATO, reports from Ukraine claimed that these statements are meant to create tension in the media as Ukraine’s stand of a ceasefire and withdrawal of troops and strong security guarantees is not being compromised.
The Federal Reserve raised rates by 25 basis points in the middle week with an 8-1 vote. Bullard, St. Louis Fed President, was the only one who voted against. Bullard stated that he wants the US central bank implement a balance sheet reduction plan and recommended that the FOMC “try to achieve an level of policy rates above 3% this fiscal year.” Fed Governor Chris Waller later said that he supports 50 bps rate increases in the “near Future” but that the current data “is screaming for” 50 basis point hikes.
The Minnesota Fed’s Kashkari said that he believes there is a neutral rate of 2%, continuing the Fed talking parade. The US central bank will have to raise rates if inflation continues. Concerning Quantitative tightening (QT), he expects the Fed to tighten twice as fast as previously.
The US economic docket featured Existing Homes Sales for February was 6.02M lower that the 6.1M forecast, while the Consumer Board’s Leading Index rose 0.3% higher than the 0.2% estimate.
