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Gold And Stocks Lose Some Of Their Luster Following U.S. Inflation Data

Social Security Benefits
Social Security Benefits; Source- MARCA

Tuesday saw a little decline in the appeal of gold and global equities after data revealed that, although U.S. inflation slowed in November as anticipated, investors still don’t think rates will drop any quicker in 2019.

Treasury Rates Remained Unchanged

After rising 3.2% in October, as predicted, U.S. consumer prices increased 3.1% in the year ending in November.

Following the release of the data, U.S. Treasury rates remained unchanged, gold pared gains, and the dollar recovered some of the day’s losses versus a basket of currencies.

Now that the inflation numbers have been released, investors are waiting to see what happens at the Federal Reserve meeting on Wednesday. With attention focused mostly on Chair Jerome Powell’s remarks during his news conference and the central bank’s economic projections, it is widely anticipated that the central bank will maintain rate stability.

“The rate of inflation is coasting toward the Fed’s target, but not quickly enough for the Fed to consider lowering interest rates. Powell would undoubtedly argue that while the work is not yet finished, it is at least nearer its conclusion than its inception, according to chief economist Brian Jacobsen of Annex Wealth Management.

Inflation

(PHOTO: NPR)

According to CME FedWatch, markets are currently pricing in a 46% chance of a rate drop in March, down from 57% a week ago.

Quick And Slight

Since the Fed’s meeting in November, financial conditions have relaxed, which analysts predicted will affect the central bank’s decision-making.

According to Erik Weisman, chief economist and portfolio manager at MFS Investment Management, “the Fed will feel that it cannot afford to have financial conditions ease further, as that could potentially re-accelerate labor demand and put renewed upward pressure on the rate of consumer inflation.” “Whether the market takes the hint remains to be seen and will likely be driven by the unfolding macro data more than Fed jawboning.”

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