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  • Inflation concerns continue to plague markets as US consumer prices rise at fastest pace in 40 years

    Inflation concerns continue to plague markets as US consumer prices rise at fastest pace in 40 years

    US consumer prices rose at the fastest pace in 40 years in February 2022, reflecting a sharp increase in energy and food prices as well as rising demand for goods and services as the economy recovers from the pandemic. This has raised concerns that inflation may be accelerating faster than anticipated, potentially leading to a sustained period of higher prices that could erode purchasing power and dampen economic growth.

    The Federal Reserve has been closely monitoring inflation trends and has signaled that it may begin to raise interest rates sooner than previously anticipated in order to keep inflation under control. However, this could also lead to tighter financial conditions and potentially slower economic growth.

    The inflation concerns have also led to increased volatility in financial markets, with investors closely watching economic data releases and central bank policy announcements for signs of potential shifts in inflation or monetary policy. Some sectors of the economy, such as energy and consumer goods, have been particularly affected by the rising prices, while others, such as technology and healthcare, have been relatively insulated from the effects of inflation.

    Overall, the inflation concerns reflect a complex set of economic factors that are still evolving and could have significant impacts on the global economy in the coming months and years.

  • The commercial real estate market freezes as rate hikes!

    The commercial real estate market freezes as rate hikes!

    As the CPI is historically high, the US and other countries are starting to raise interest rates.

    For example, in commercial real estate in Los Angeles, the sales volume of commercial mortgage bonds fell sharply due to rising interest rates, plummeting by about 85% year-on-year.

    Adding to the pressure is a recent spate of defaults in the office and retail property sectors, making bond buyers more cautious.

    This week, Bloomberg reported that Brookfield Corp., the parent company of the largest office landlord in downtown Los Angeles, has defaulted on loans related to two buildings due to falling demand for space rather than refinancing the debt.

  • How about gold price and USD in 2023?

    How about gold price and USD in 2023?

    Gold price is looking to build on the previous rally above $1,850 as bulls gather pace for the next push higher. However, the bright metal is struggling to find new demand as investors turn cautious and flock to safety in the US Dollar. Meanwhile, the US Treasury bond yields are holding near weekly lows, limiting any downside for Gold buyers. The US Dollar incurred steep losses on Wednesday as the mixed US ISM Manufacturing PMI data and US Federal Reserve (Fed) Minutes failed to impress.
    Even though the Fed Minutes showed that the officials are committed to fighting inflation and expect higher interest rates to remain in place, markets continue pricing a dovish Fed pivot by the end of 2023 as recession risks amplify. Accordingly, attention now turns toward the US employment data, as it will provide further insight into the Fed’s policy path this year.

    Gold Price: Key levels to watch

    1. The gold price is challenging the bullish commitments at $1,854.
    2. The last line of defence for Gold buyers is at the Bollinger Band one-day Upper at $1,845.
    3. The next upside target is at the $1,860 round number.

  • What Australia will do after US raised another 50 basis point of interest rate?

    What Australia will do after US raised another 50 basis point of interest rate?

    The news that the United States has raised another 50 basis points of interest rate has been greeted with a degree of trepidation by many in the Australian economy. A higher rate of interest in the US will almost certainly lead to a rising Australian dollar, which will in turn impact on our exports, as well as on the cost of imported goods and services. As a result, many Australian businesses may find it difficult to remain competitive in the global marketplace.

    For the Australian government, the immediate response to the US rate hike is likely to be one of cautious monitoring. The Reserve Bank of Australia (RBA) will be paying close attention to the effects of the US rate rise on the Australian economy, and is likely to take necessary steps to protect the country’s economic stability.

    In the short term, the RBA is likely to take steps to encourage the flow of investment into the Australian economy. This could involve lowering the cash rate, or introducing other measures to encourage investment. These measures would be aimed at stimulating economic activity, and offsetting the impact of the higher US interest rate.

    In the longer term, the Australian government will need to implement policies to ensure that local businesses remain competitive in the global market. This could include measures to reduce the cost of doing business, such as cutting taxes or providing incentives for businesses to invest in new technology. It could also involve measures to encourage innovation, such as providing subsidies to small businesses to invest in research and development.

    The Australian government will also need to consider the impact of higher interest rates on consumer confidence. With people’s incomes being squeezed as a result of higher interest rates, confidence in the economy could suffer, leading to reduced consumer spending. To combat this, the government could introduce measures to encourage consumer spending, such as targeted tax cuts or increased government spending on infrastructure projects.

    Finally, the government will need to take into consideration the impact of the higher US interest rate on the housing market. With property prices already high in Australia, a higher US rate could lead to further increases, making it even harder for first-time buyers to get onto the property ladder. To address this, the government could introduce measures to make it easier for people to access home loans, such as increasing the amount of deposit required, or introducing schemes to make it easier for first-time buyers to get a mortgage.

    In summary, the US rate rise is likely to have a significant impact on the Australian economy. The government will need to take action to ensure that businesses remain competitive, consumer confidence is maintained, and the housing market remains accessible to first-time buyers.