In the currency market, the dollar continued its charge, touching three month high. The dollar index, which measures the U.S. currency against six major rivals, was last at 105.77, up 0.114%, after surging 1.3% on Tuesday. Worries persist that the Fed’s aggressive battle against inflation could tip the economy into recession, and recent turmoil in the banking sector, sparked by failures of SVB Financial Group and Signature Bank, have exacerbated those fears. The sell-off was exacerbated by Treasury Secretary Janet Yellen’s remarks before lawmakers that the Federal Deposit Insurance Corporation was not considering “blanket insurance” for deposits arising from recent strife in the sector. The semi-annual, two-day monetary policy testimony will continue on Wednesday.
- The Fed will likely need to raise interest rates more than previously expected in response to recent strong data, Powell said on the first day of his semi-annual, two-day monetary policy testimony before Congress.
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- US stocks gained ground Monday, putting the S&P 500 on track for a third straight straight win.
Investors, many facing steep losses due to the pandemic-driven shakeout in assets over the past few months, have also had to contend with renewed US-China trade tensions. Glenair’s QPL Micro-D and COTS connectors feature Glenair’s high-density micro TwistPin contacts set on .050 centers in arrangements from 9 to 130 contacts. Thanks to special material selection, fabrication and heat treating techniques, TwistPin contacts resist high temperature stress relaxation for up to 1000 hours at 125°C. Space-grade Micro-D connectors with NASA and ESA screening options are also available. The products are manufactured in the UK for short lead times in Europe as well as in the USA. Consumer morale in the eurozone’s two biggest economies diverged starkly in August as French consumers benefited from fresh government measures while concerns over rising energy bills hit their German counterparts, surveys showed on Friday.
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The greenback was essentially unchanged against a basket of world currencies after touching a three-month high in Tuesday’s session as investors digested Powell’s hawkish testimony. European stocks closed marginally higher as market participants weighed the strong US data and downward revisions to fourth quarter euro zone economic growth. With riskier assets still reeling from the heavy sell-off a day earlier, investors are focused on February jobs data due on Friday for confirmation that continued strong jobs growth supports bigger rate increases. After a two-day meeting, the Federal Open Market Committee voted unanimously to increase its target for the federal funds rate to a range of 4.75% to 5%. The way, the markets reacted globally, it looked like panic buttons had been pressed. However, a closer reading of the speech would tell you that Powell has actually taken the ambiguity out of the policy and given clarity on the monetary front.
Federal Reserve Chair Jerome Powell reiterated the likelihood of aggressive rate hikes to tackle inflation. Investors will look for clues about the Fed’s future rate hiking path when Powell testifies before Congress on Tuesday and Wednesday. Since Powell last spoke strong economic data and hotter than expected inflation have raised concerns the Fed will raise rates higher than expected or keep them higher for longer. And with potential Fed rate hikes their key concern, Monday’s data had already dampened investor enthusiasm, said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago.
Reuters – Most of emerging Asia’s stocks and currencies rose on Wednesday after the Federal Reserve Chair Jerome Powell sounded less hawkish than expected overnight, with the South Korean won jumping for a third day on growing rate hike bets. The Thai baht, Malaysia’s ringgit and the Taiwanese dollar rose 0.2% to 0.3%, while stock markets in South Korea, Indonesia and the Philippines climbed between 0.3% and 1.3%. The U.S. dollar tumbled after Powell did not provide any new details on interest rates at a congressional hearing on his confirmation for a second term as the Fed’s chair, adding that he believed the economy could handle tighter monetary policy. The US stock market indexes pared early gains and closed mixed on Monday, as investors awaited Fed Chair Jerome Powell’s testimony on Tuesday and important labor market data at the end of the week.
How Powell’s Surprise Rate Signal May Rip Through Asia Stocks, Currencies
The California-based bank slid 8.3%, while peer Signature Bank (SBNY.O) declined 2.4%. The spotlight will now be on Friday’s U.S. payrolls data and next week’s inflation figures that will dictate further moves from the Fed. “Powell has essentially opened the door to 50 basis point hike,” said Chris Weston, head of research at Pepperstone. Federal Reserve Chair Jerome Powell said the central bank will use all its tools to safeguard the banking system. Powell acknowledged that the issues in the banking system in recent weeks will create tighter credit conditions.
That boosted beaten down tech stocks the most on Wall Street, and South Korea’s tech heavy bourse KOSPI tracked those gains to rise 1.4%, eyeing its best session in about six weeks. The won advanced 0.4%, taking this week’s gains to almost 1% ahead of the Bank of Korea policy review on Friday where a 25 basis point hike to the benchmark interest rate was extremely likely. The Fed will likely need to raise interest rates more than previously expected in response to recent strong data, Powell said on the first day of his semi-annual, two-day monetary policy testimony before Congress.
Asian shares wobbled while the dollar was perched near a three-month top on Thursday after a spate of economic data overnight appeared to support Federal Reserve Chairman Jerome Powell’s hawkish guidance on further interest rate increases. While traders were flipping bets in favor of a 50 basis point rate hike this month, Scott Ladner, chief investment officer at Horizon Investments, said the size of the hike would depend on the upcoming payrolls data and inflation numbers. Powell sent stock investors fleeing when he told U.S. lawmakers earlier in the day that the Fed is prepared to hike rates in larger steps if future economic data suggests tougher measures are needed to control rising prices. BlackRock’s chief investment officer of global fixed income, Rick Rieder, said the Fed could raise rates to 6% and keep them there for an extended period of time to fight inflation.
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“It looks like we’re in for another negative day of trading here in the Asia Pacific region,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “It’s very clear that the containment has done economic damage and the recovery will take years and not weeks,” he said. On Wall Street, main indexes fell after Powell’s comments, with rate-sensitive banks and high-growth stocks that tend to outperform in a low-interest-rate environment, coming under pressure. “Core liquidity is declining, and surplus is falling very sharply, and the process will continue over the next couple of months,” said Pankaj Pathak, fixed income fund manager at Quantum Asset Management. He said the Federal Reserve will likely need to raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation. His remarks has now led to apprehensions that the Fed may even raise borrowing costs by 50 basis points higher than the 25 basis points effected in February.
Monitor the latest movements within the https://1investing.in/ Industries Inc real time stock price chart below. You can find more details by visiting the additional pages to view historical data, charts, latest news, analysis or visit the forum to view opinions on the POWL quote. Technically, higher rates hit valuations since the future cash flows get discounted at a higher cost of capital.
Consumer mergers and acquisitions: understanding takeovers expectations feed into actual inflation and spending. Powell calls it “Rational Inattention”, wherein people pay less attention to inflation when it is low and more attention when inflation is high. C) Powell has underlined that the Fed would chase inflation even if it meant economic pain. In fact, Powell was emphatic enough to say that given a choice between growth and price stability, the Fed would sacrifice growth for the sake of price stability. The US central bank’s aim has been to achieve maximum employment and inflation at the rate of 2 per cent over the long run. “The time for moderating the pace of rate increases may come as soon as the December meeting,” Powell said at the Hutchins Center on Fiscal and Monetary Policy, Brookings Institution here.
Powell, in his testimony before the Senate Banking committee on Tuesday, said US inflation was far away from the Fed’s goal of 2 per cent rate in spite of a recent moderation of print — and this requires the interest rates to stay higher for a longer period. Powell’s comments also indicate that the Fed may raise its assessment of to what extent it will raise interest rates over the year. Sterling was last trading at $1.1824, down 0.02% on the day, having touched more than three month low of $1.1812 earlier in the session.
“Our banking system is sound and resilient, with strong capital and liquidity. We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound,” Powell said. The Dow Jones Industrial Average rose 100 points, or 0.3 percent, while the S&P 500 advanced 0.6 percent. Declining issues outnumbered advancing ones on the NYSE by a 2.25-to-1 ratio; on Nasdaq, a 2.57-to-1 ratio favored decliners. The S&P 500 posted six new 52-week highs and 13 new lows; the Nasdaq Composite recorded 44 new highs and 179 new lows. Thirty-seven of the Nifty 50 constituents logged losses with Hindalco (HALC.NS) and IT stocks falling the most.
- Also, once inflation is controlled, it directly contributes to the growth in real GDP.
- Sensex, Nifty face severe Monday blues as the 30-stock benchmark sank over 1000 points as Fed Chief Powell indicated that aggressive rate hikes will continue from the Federal Reserve.
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The central bank on Wednesday left its key overnight interest rate on hold, becoming the first major central bank to suspend its monetary tightening campaign. Powell hinted at larger economic woes and expectations of a worsening credit crunch, which would ultimately do the Fed’s job for it by harming the economy and labour market while aiding in the fight against inflation. Rising bond yields tend to weigh on equity valuations, particularly those of growth and technology stocks, as higher rates reduce the value of future cash flows. Oil prices soared about 2% on Wednesday as the US dollar slipped to a 6-week low. US West Texas Intermediate crude closed $1.23, or 1.8%, higher at $70.90. US stocks pared gains on Wednesday after Federal Reserve chair Jerome Powell reiterated the central bank’s commitment to tame inflation.
Powell, who will testify again on Wednesday before the House of Representatives Financial Services Committee, also added that the Fed would not consider changing its 2% inflation target and the job market does not suggest an economic downturn is close. “From a risk-rewards standpoint investors have to recalculate their desire to be invested with this new paradigm,” said Adam Sarhan, chief executive of 50 Park Investments, based in Orlando, Florida. “It’s the realization the Fed is going to err on the side of being more hawkish.” Treasury yield curve saw its deepest inversion in more than 40 years on Tuesday. Earlier this month, the collapse of Silicon Valley Bank and Signature Bank in the US ignited contagion fears of banking crisis.
On Monday, the Nifty and Sensex opened deep in the red but recovered through the day. While the markets did still close in the red, the recovery indicates that there were still pockets of buying. E) One of the arguments used by Powell to justify the aggressively hawkish stance is central bank credibility. To continue on the previous point, Powell pointed out that Inflation expectations of households would be driven by how aggressive the Fed was in fighting inflation. Fed had already begun the anti-inflation drive and it was now expected to take it to its logical conclusion.
Economists polled by Reuters are expecting an increase of 200,000 jobs compared with the much stronger-than-expected 517,000 jobs reported in January. Ahead of the crucial nonfarm payrolls report on Friday, data showed U.S. private payrolls increased more than expected in February, pointing to continued labor market strength. Bank of England is likely to raise interest rates on Thursday after British inflation climbed to 10.4% in February. Remember that it is not just inflation but inflation expectations that really sets the tone for consumer spending.
The US Treasury yields turned positive ahead of Powell’s testimony which can give clues on further monetary policy tightening. SINGAPORE – Asian shares were on track for their worst day in a month on Wednesday after hawkish comments from Federal Reserve Chair Jerome Powell raised the possibility of the U.S. central bank returning to large rate hikes to tackle sticky inflation. Asian stock market indexes are trading higher, as investors await the central bank of Australia’s interest rate decision and a slew of economic data across the region. The key market indexes Nikkei, Hang Seng, and Shanghai are trading higher by 0.42 percent, 1.83 percent, and 0.52 percent respectively. The won has also bounced since the South Korean finance ministry on Monday warned currency market movements were being closely watched after it traded at 1-1/2 year lows last week.