NFP Beat Stirs Up the Markets
Markets have been shaken recently by news of the large beat in the Non-Farm Payroll (NFP) data, and many are guessing if the Federal Reserve (Fed) would take a more hawkish position. The US dollar’s trajectory from last week’s low has been reversed as a result of this uncertainty.
The Fed’s Position Is Still Uncertain
Despite the NFP surprise and growing inflation worries, Fed speakers, including Chair Powell, have not indicated a shift in policy. More information is required before any formal modifications are made because the Fed’s position is still not clear at this time.
Markets Display Hope
Risk-taking has returned as the FTSE hits yet another record high and stock markets display confidence. Despite the dearth of data this week, Fed speakers and the significance of the NFP beat have received most of the attention.
Powell Doesn’t Surprize
In advance of his address on Tuesday, Powell was tipped off that he could disagree with the FOMC members’ perceived dovishness. Instead of trying to sound hawkish, Powell reiterated the Fed’s belief that the disinflationary process has already begun and is anticipated to result in “substantial” decreases in inflation this year.
NFP Does Not Yet Affect Fed Forecasts
The Fed highlighted that one report does not yet affect its estimates, while acknowledging the impact of the strong job market and the NFP data. Although an increase in inflation would worry the markets, the Fed thinks that the current economic growth may not result in greater inflation anytime soon.
Finally, Fed Chair Powell gave dovish speculation a minimal pushback, and the Fed’s outlook is still cautiously positive. To ascertain any potential adjustments in the Fed’s strategy, more information and events will be required.