Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, delivered remarks at the Milken Conference 2024 Global Conference Sessions, held at The Beverly Hilton in Beverly Hills, California, on May 7, 2024. The image accompanying this report was captured by David Swanson | Reuters.
This report stems from CNBC Daily Open, an international markets newsletter designed to keep investors informed on global market developments. Subscriptions are available through CNBC’s website.
Key Highlights
Markets Gain Momentum
U.S. markets experienced a rise on Monday, with the S&P 500 and the Dow Jones Industrial Average reaching new closing highs. Asia-Pacific markets saw a significant increase on Tuesday, particularly in Chinese and Hong Kong markets, which rose over 3% following Beijing’s announcement of policy easing measures.
PBOC Policy Easing
The People’s Bank of China (PBOC) Governor Pan Gongsheng announced a reduction in banks’ reserve requirement ratio, effectively lowering the amount of cash banks must hold and increasing liquidity in the economy. Following this announcement, yields on Chinese bonds dropped to record lows.
New Property Stimulus in China
At the same press conference, the PBOC governor revealed plans to reduce interest rates on existing individual mortgages by an average of half a percentage point and to lower the down-payment ratio for second home purchases from 25% to 15%. This led to a surge in the shares of Hong Kong-listed property companies.
Revised Offer for Boeing Workers
Amid an ongoing strike by Boeing workers, the company proposed a revised contract offer, increasing wage growth to 30% over four years from an earlier proposal of 25%. Boeing also reinstated annual bonuses and doubled the contract ratification bonus to $6,000. The labor union is currently reviewing the new offer.
Tech for Big Tech
The growing influence of artificial intelligence (AI) is positively impacting related stocks, particularly those in sectors requiring specialized chips, data centers, and electricity. According to Japanese bank Nomura, the next industry predicted to benefit is the sector specializing in the cooling systems of data centers.
Economic Commentary
On Monday, various members of the Federal Reserve shared their perspectives. In an interview with CNBC, Minneapolis Fed President Neel Kashkari highlighted the strength of the labor market, suggesting the Fed aims to maintain its robustness. Conversely, Atlanta Fed President Raphael Bostic noted that progress on inflation and the cooling labor market has been swifter than anticipated. Bostic’s comments implied some concern among Fed officials regarding the labor market’s current state. Additionally, Chicago Fed President Austan Goolsbee emphasized focusing on employment risks alongside inflation, suggesting the need for more interest rate cuts to support the economy.
Despite the varied perspectives, the overall message from the Fed did not cause market alarm. Major U.S. indexes saw slight gains, with the S&P 500 rising 0.28%, the Dow advancing 0.15%, and the Nasdaq Composite climbing 0.14%, driving the S&P and Dow to new closing highs.
The consistent narrative from the central bank underscores its efficacy in guiding the economy towards a soft landing.
Contributions to this report were made by CNBC’s Jeff Cox, Brian Evans, and Alex Harring.
