Strengthening US GDP Data Leaves Interest Rate Direction in Question
US economic data released last night sent mixed signals to the market. Revised second-quarter Gross Domestic Product (GDP) showed growth of 3.8% (annualized), higher than previously estimated, indicating the US economy still has strong momentum.
However, the labor market is showing signs of weakness. The unemployment rate rose to around 4.3%, while job creation has slowed. Although the latest weekly jobless claims fell to 218,000, the medium-term trend still points to a cooling labor market.
The Fed Expected to Hold Interest Rates
The combination of strong economic growth and slightly higher revised PCE inflation means the Federal Reserve is expected to be cautious and await further data, particularly next month's employment and inflation reports.
"Solid GDP growth reduces the urgency for an immediate interest rate cut. However, if labor market weakness persists, the possibility of a cut remains open," a macroeconomic analyst told Reuters.
Market Impact
US bond yields have tended to stabilize, reflecting market expectations that interest rate cuts are likely to be gradual. Gold prices have moved cautiously, as the prospect of a still-tight monetary policy stance tends to curb short-term bullish sentiment.
Upcoming Data Will Be Decisive
The market now awaits the release of the latest inflation data (PCE) and the employment report (Nonfarm Payrolls) on October 3. If employment figures decline sharply and inflation declines, the likelihood of additional interest rate cuts could strengthen, potentially supporting gold prices and risk assets.
Source : Newsmaker.id
