Inflation data gives US markets a boost
Saturday 14 August 1999
Shares, bonds and the dollar gained after it emerged that factory prices rose less than expected last month, allaying market jitters just two weeks before the Federal Reserve meets to consider interest rates.
The producer price index rose 0.2 per cent in July, less than the 0.3 per cent rise forecast by US economists. The figures, while reassuring, did not dislodge the consensus among economists that the Fed will announce a pre-emptive rate hike when it meets on 24 August.
David Blitzer, chief economist at Standard & Poor's in New York, said the Fed would look at the general economy, not just at individual indices of inflation. "There's no question they'll still raise rates on 24 August," he told Reuters television. "It depends less on inflation than on the overall pace of the economy."
President Bill Clinton implicitly acknowledged the apprehension in advance of this month's rate decision in a highly unusual television interview before the figures were released. Mr Clinton, who habitually steers clear of statements that could affect the markets, offered a series of reassurances apparently intended to calm market jitters in the light of recent adverse indicators - rises in retail prices and wages, a stock market retreat, and a recent fall in the dollar against the yen and the euro.
Asked whether evidence of increasing wages could fuel inflation, Mr Clinton replied: "I don't think there's any evidence of that now," citing intense competition and productivity increases.
"I think people are ... earning their pay increases and they've worked hard for them and, so far, I don't think there is evidence of inflation."
The financial markets responded sharply. By midday the Dow Jones was ahead 150 points or 1.4 per cent. Against the yen, the dollar surged to 116.20 yen - a two week high - up from 115.29 yen on Thursday and a low of 114.71 yen earlier yesterday.
The euro lost a cent against the dollar slipping to $1.0575 from $1.0674 at the previous close. The benchmark 30-year Treasury bond rose while the yield, which moves in the opposite direction, dropped to 6.12 per cent from 6.27 per cent.
Kirstie Allsopp has waded into the female fertility debate again
...and it wasn't caused by an asteroid crash, as first thought
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 Prince held a Facebook Q&A and this is the only question he answered...
- 3 35,000 walrus gather on north-west Alaska beach 'for a rest'
- 4 Brad Pitt, on the moment he completely lost his temper with Clint Eastwood's son
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Stella McCartney apologises over controversial 'very ill' model picture on Instagram
Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
Prince held a Facebook Q&A and this is the only question he answered...
Brad Pitt, on the moment he completely lost his temper with Clint Eastwood's son
Cheryl Cole named 'the most dangerous celebrity' on the internet
Former Tory donor Arron Banks ups his Ukip donation to £1million following William Hague 'nobody' comment
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...