Stocks lower ahead of Fed Chair Powell’s speech
Stocks edged lower as investors awaited clues on the path of interest rates from a raft of central bank officials including Federal Reserve Chair Jerome Powell.
Europe’s Stoxx 600 fell 0.1% and US equity futures traded little changed. The 10-year Treasury yields climbed by three basis points to 4.6%. West Texas Intermediate held at $77, near a three-year low. Marks & Spencer Group Plc soared 10% after profit surged and it reinstated a dividend.
Traders are trying to gauge how hard global central bankers will push back against the drop in government bond yields, which potentially hinders efforts to keep a handle on inflation. Up today are U.S. policymakers including Powell and New York Fed President John Williams, as well as Bank of England Governor Andrew Bailey and officials from the European Central Bank.
“Fed speakers will attempt to jawbone and cool market expectations for rate cuts,” said Todd Schubert, Dubai-based senior fixed-income strategist at Bank of Singapore. “The market is underestimating the Fed’s resolve in bringing down inflation to 2% and we would not expect a sustained rally in risk assets until there is clearer evidence of a pronounced downward trajectory in inflation.”
Fed Bank of Minneapolis President Neel Kashkari said policymakers have yet to win the fight against inflation and they will consider more tightening if needed. His Chicago counterpart Austan Goolsbee said officials don’t want to “pre-commit” decisions on rates.
At the same time, if the Fed pivots its monetary policy and allows the economy to avoid a recession, global equities could be poised for a double-digit rally in 2024, according to HSBC Holdings Plc strategists.
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