What’s more, some Fed hawks continue to suggest rates may not be cut at all this year.
Atlanta Fed President Raphael Bostic said on Tuesday that it’s possible rates stay on hold through 2024 if progress on inflation stalls and the economy continues to outperform.
“I can’t take off the possibility that rate cuts may even have to move further out,” Bostic said in an interview with Yahoo Finance.
Fed minutes of its March policy meeting are also released later on Wednesday.
Inflation concerns apart, there were some signs of stress in the U.S. corporate picture on Tuesday as the NFIB’s small business survey showed confidence ebbing to an 11-year low – albeit with inflation still registering as the major concern.
Overseas markets were firmer going into the big U.S. release – perhaps partly emboldened by hopes of earlier credit easing in Europe and elsewhere.
Tech stocks were a winner in Europe and Hong Kong early on Wednesday after giant Taiwanese chipmaker TSMC reported a forecast-beating 16.5% rise in first-quarter revenue – the high end of the firm’s own guidance as its sales boomed on demand for artificial intelligence applications.
Japan’s Nikkei and China’s mainland indexes were underperformers, however.
Japanese government bond yields hit a four-week high after Bloomberg reported the Bank of Japan will likely consider raising its inflation forecast at a policy meeting later this month.
But, still wary of BOJ intervention, the dollar/yen exchange rate hovered just under the 152 yen level.
BOJ boss Kazuo Ueda said the central bank would not directly respond to currency moves in setting monetary policy, brushing aside market speculation that the yen’s sharp falls could force it to raise interest rates.
“We absolutely won’t change monetary policy directly in response to exchange-rate moves,” Ueda told parliament.
China’s markets were also under a cloud on Wednesday after Fitch cut its outlook on China’s sovereign credit rating to negative, citing risks to public finances as the economy faces increasing uncertainty in its shift to new growth models.
The outlook downgrade follows a similar move by Moody’s in December and comes as Beijing ratchets up efforts to spur a feeble post-COVID recovery in the world’s second-largest economy with fiscal and monetary support.
Chinese government bonds held steady, however.
