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The Fed doesn't understand the causes of inflation: Larry Kudlow

28 September 2017

US stock benchmarks are mixed, with the Dow Jones Industrial Average DJIA, -0.01% on track to extend a four-session skid, while gold futures GCZ7, -0.86% perceived as a haven asset saw a firm drop below $1,300 an ounce.

Yellen's remarks attempt to resolve a debate that has split members of the central bank among those anxious that inflation may be permanently anchored below the Fed's 2 percent target because of structural changes in the global economy, and those who feel it is only a matter of time before tight labor markets lead wages and prices to rise.

Japanese shares hit 1-1/2 week lows as many heavyweight stocks went ex-dividend, offsetting investor optimism over a declining yen following Yellen's comments.

US officials emphasized the urgency of attempts at diplomacy to ease tensions with North Korea on Tuesday, while the USA stepped up sanctions amid an escalating war of words between Washington and Pyongyang.

On the eve of its announcement, Trump said lawmakers should expect a "very, very powerful document" that would cut taxes "tremendously" for the middle class. With President Trump due to reveal tax reform plans, the rally may extend to the next resistance at the 94 level.

The Federal Reserve has kept its benchmark lending rate near record lows since the 2008 financial crisis to stimulate the USA economy.

The Chairlady of the US Federal Reserve Janet Yellen will this afternoon deliver her latest thoughts on the US economy.

Yellen's speech was interpreted by markets as hawkish as she noted that it would be "imprudent" to keep monetary policy on hold until inflation reaches 2%, thus lending weight to the possibility of a December US rate increase.

United States gold futures for December delivery fell 0.35% to USD1,297.10 per ounce.

Catalan bishops call for calm as Spain cracks down on independence vote
Polls consistently show the region's inhabitants favor holding a referendum but are roughly evenly divided over independence from Spain.

The quite hawkish remarks sent the dollar and US bonds higher as investors grew confident of another rate hike in December.

The S&P 500 finished little changed at 2496.84, while the Dow Jones Industrial Average declined 11.77 points, or 0.1%, to 22,284.32.

Comex December gold, at the session low of $1,285.30 an ounce, has lost almost 6% of its value since the one-year high of $1,362.40 on September 8.

-U.S. data on durable-goods orders, GDP and personal spending later in the week will provide further clues as to the Fed's policy path.

New Zealand's benchmark S&P/NZX 50 index rose 26.60 points or 0.34 percent to 7.913.78, gaining for the fourth straight session as investors shrugged off potential uncertainty on the domestic front.

Nasdaq 100 e-minis were up 5.5 points, or 0.09 percent, on volume of 29,784 contracts.

-West Texas Intermediate crude fell 0.5 percent to $51.94 a barrel.

-The euro sank 0.5 percent to $1.1792, the weakest in five weeks.

The Fed doesn't understand the causes of inflation: Larry Kudlow