Expected rate rise build up begins in US – New York Report
Last week’s back-to-back equities selloff might have been a chance to ride a US stocks rally towards the end of the year, amid the goldilocks economy scenario of a strong jobs market and falling oil prices.
The S&P 500 rallied two per cent Friday to eke a slight gain for the week, the ninth up week out of the last 10, after the US economy added more jobs than expected in November in a show of the economy’s resilience.
The data likely paved the way for the Federal Reserve to raise interest rates this month for the first time in nearly a decade, while still keeping the US central bank committed to a shallow and slow pace of increases.
“The story today in the US is growth with modest inflation, which is great for equities,” said Paul Zemsky, chief investment officer, multi-asset strategies and solutions at Voya Investment Management in New York.
“I see nothing on the calendar outside a geopolitical event that is going to make them (the Fed) change course at this point,” he said.
Markets have for weeks forecast the Fed to raise rates after its December meeting next week.
Fed chair Janet Yellen is not expected to surprise markets.
Quincy Krosby, market strategist at Prudential Financial, said: “As long as she sticks to the script that she wrote the market shouldn’t be shocked. The market is again factoring in the rate hike, the good (payrolls) news should be good news that ultimately is a positive.”
Adding to the strong jobs data as a bullish stocks catalyst, crude prices resumed their fall after news that the Organisation of Petroleum Exporting Countries was planning to maintain its production near record highs.