Gold prices slipped below the key $2,000 level due to a resurgent dollar, while Treasury yields edged higher on growing market expectations that the Fed will hike rates when policymakers conclude a two-day meeting on May 3.
Consumer price index data on Wednesday will encourage the market to see a rate hike next month, but more important reports on Thursday and Friday will show the extent of emergency funding for banks, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
“My sense is that the labor market and CPI would favor the Fed raising rates again. However, what has made the market have second thoughts is the extent of the tightening of lending.”
“We saw in the last two weeks there’s a record decline in commercial and industry loans,” Chandler said.
Futures show a 71.7% likelihood that the Fed will raise rates by 25 basis points to a range of 5.0%-5.25% next month, CME Group’s FedWatch tool shows.
But…
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