NEW YORK, Aug 24 — The dollar eased and yields at first fell yesterday as data showing slower economic growth raised initial hopes the Federal Reserve will back off its aggressive hiking of interest rates at its central bank symposium at Jackson Hole, Wyoming on Friday.
Sales of new US single-family homes plunged to a 6-1/2-year low in July while a survey from S&P Global showed its measure of private sector business activity fell to a 27-month low, suggesting Fed efforts to tame inflation were working. But Goldman Sachs said in a note that it expected Powell to reiterate the case for slowing the pace of tightening as indicated in his July press conference and the minutes released last week from that meeting of policymakers.
With demand cooling, another big negative shock looks likely and a recession is also more likely than not between now and mid-2023, if one is not already underway, Adams said. Markets have see-sawed on whether the Fed will raise rates by 50 or 75 basis points next month. The probability of a 75 basis point hike is 52.5 per cent and the smaller hike is at 47.5 per cent, bets that reversed throughout the day.
While the S&P flash composite Purchasing Managers’ Index of business activity in Europe was not as bad as feared, analysts said more grim news for the economy is likely given how gas prices have surged to record highs ahead of winter.