Fed Harker signals end of Fed rate cycle and 'soft landing' 💵 US100 rises 0,2%

Wall Street react on 'dovish' comments from Patrick Harker, President of Federal Reserve Bank of Philadelphia.

Fed Harker

• I see steady disinflation, with it falling to below 3% this year. The Fed is likely to be done with rate hikes.
• Absent stark turn in data, the fed can hold rates. Data will signal the need to adjust policy "either way".
• It will take time for Fed rate hikes to be fully felt.
• The labor market is coming into better balance. I don't expect to see mass layoffs.
• Auto strikes and renewed student loans will weigh on the economy.
• I expect the unemployment rate to rise to about 4%.
• The labor market turmoil could weigh on the economy.
• Growth to moderate next year but I do not see a recession.
• Tighter credit conditions akin to rate hikes in impact.
• I support higher for longer interest rate stance. I can’t say for how long rates will need to remain high.
• Some parts of economy will feel the impact of AI technology. The jury's out on whether AI to mean a big productivity boost.

All of this suggests that the Fed is likely to hold off on a hike which could theoretically allow yields to fall. At the same time, however, the ECB is also hinting at the possibility of a pause in rate hikes cycle. Harker talks about the labor market and worries about possible turbulence, which may suggest that the Fed will want to make a soft landing with little further increase in the unemployment rate.

US100 is trading higher after Harker comments but bullish move started even before Harker speech. At the same time US dollar is very strong today as Middle-East conflict signals risk aversion sentiments before the weekend.

Source:xStation5