Markets Overview

  • ASX SPI 200 futures little changed at 7,273.00
  • Dow Average up 0.4% to 33,826.69
  • Aussie down 0.2% to 0.6865 per US$
  • U.S. 10-year yield fell 4.4bps to 3.8148%
  • Australia 3-year bond yield rose 5 bps to 3.50%
  • Australia 10-year bond yield rose 6 bps to 3.82%
  • Gold spot up 0.3% to $1,842.36
  • Brent futures down 2.5% to $83.00/bbl

Economic Events

The Federal Reserve’s preferred inflation gauges this week, along with a groundswell of consumer spending, are seen fomenting debate among central bankers on the need to adjust the pace of interest-rate increases.

The US personal consumption expenditures price index is forecast to rise 0.5% in January from a month earlier, the largest advance since mid-2022. The median estimate in a Bloomberg survey of economists expects a 0.4% advance in the core measure, which excludes food and fuel and better reflects underlying inflation.

Those monthly advances are seen slowing the deceleration in annual inflation that remains well north of the Fed’s goal. In addition, Friday’s data will underscore a fully engaged American consumer, with economists anticipating the sharpest advance in nominal spending on goods and services since October 2021.

This week’s report is also projected to show the largest increase in personal income in 1 1/2 years, fueled both by a resilient job market and a large upward cost-of-living adjustment for Social Security recipients.

In sum, the income and spending data are expected to illustrate the challenge confronting a Fed in the midst of its most aggressive policy tightening campaign in a generation. The report follows figures this past week revealing a spike in retail sales and hotter-than-anticipated consumer and producer price data.

Investors have been upping their bets on how far the Fed will raise rates this tightening cycle. They now see the federal funds rate climbing to 5.3% in July, according to interest-rate futures. That compares with a perceived peak rate of 4.9% just two weeks ago.

Minutes from the Fed’s latest policy meeting, at which the central bank raised its benchmark rate by 25 basis points, will also be released on Wednesday. The readout may help shed light on the appetite for a bigger increase when policymakers convene again in March after recent comments from some officials suggested as much.

Other News

One of the UFOs shot down last weekend by the US Air Force with a $400,000 missile may have simply been a $12 balloon belonging to an Illinois enthusiast club, a report said.

The Northern Illinois Bottlecap Balloon Brigade told Aviation Week on Thursday that it fears one of its diligently tracked gasbags that recently went missing was the mystery object taken out by the military over Canada on Saturday.

The Pico Balloon — a silver-coated, cylindrically shaped object — reported its last position at 38,910 feet off the west coast of Alaska on Friday.

By Saturday, based on the balloon’s projected path, it would have been over the central part of the Yukon Territory around the same time a military Lockheed Martin F-22 shot down an unidentified object of a similar description and altitude in the same area of Canada, the outlet reported.

The NIBBB — a group of enthusiasts dedicated to creating, releasing and tracking homemade balloons — declared its K9YO device “missing in action” on Saturday.

The K9YO balloon had circumnavigated the globe six times during a 123-day span before its tracking device went dark Friday. Such balloons usually float around until they’re brought down by bad weather or damaged.

The NIBBB’s balloon was equipped with a small GPS transmitter and an antenna, allowing the group to track it with a ham radio.

The Air Force used Sidewinder missiles in its targeted attacks against the Chinese spy balloon downed earlier this month and the mystery UFOs taken down last week, Fortune reported. Each missile comes at a price tag of roughly $400,000.

Pico Balloons, however, typically fall between $12 and $180 each depending on the type, Aviation Week reported.

The US downed airborne objects over Alaska on Friday and Lake Huron on Sunday, in addition to Saturday’s takedown.

On Thursday, President Biden finally addressed the unprecedented military action in North American airspace after five days of silence and told Americans there was no evidence that the three unidentified flying objects were nefarious.

“We don’t yet know exactly what these three objects were,” Biden said, echoing remarks by other administration ­officials.

“But nothing, nothing right now suggests they were related to China’s spy balloon program, or that they were surveillance vehicles from any other country,” the president added, acknowledging a disclosure made Tuesday by his National Security Council.

“The intelligence community’s current assessment is that these three objects are most likely balloons tied to private companies, recreational or research institutions, studying weather or conducting other scientific research,” Biden said.

Authorities have been working to recover the debris from the three objects recently downed over North America.

But the Royal Canadian Mounted Police, searching for the object shot down over Lake Huron on Sunday, suspended their efforts on Thursday.

The RCMP said there was a slim chance of finding the device in the 23,000-square-mile lake, especially as weather conditions worsen Friday.

So far, the US military has only found debris from the Chinese spy balloon shot down off the coast of North Carolina on Feb. 4. The object — with a payload the size of three school buses — was equipped with antennas capable of collecting communications signals and other intelligence-gathering tools.

Biden did say Thursday, “I expect to be speaking with [Chinese] President Xi [Jinping]” about the spy-balloon incident — without saying exactly when and while repeating his well-worn call for “competition, not conflict” with China.

“I gave the order to shoot it down as soon as it would be safe to do so,” Biden said of the surveillance balloon shot down.

White House officials admitted this week that “hundreds, if not thousands” of objects in the sky — including the UFOs it shot down last week — could be as innocuous as “used car lot balloons.”

The North American Aerospace Defense Command told Fox News that the FBI reached out to the NIBBB and “expects the National Security Council to have more on potentially identifying the objects.”

The NIBBB did not immediately respond to The Post’s request for comment.

(New York Post)