Global market: US stocks drop, Dollar up on Powell's hawkish message
2 min read . Updated: 07 Mar 2023, 09:47 PM IST
PremiumStocks dropped while bond yields climbed with the dollar as Jerome Powell signaled the peak in interest rates could be higher than anticipated as economic data have come in stronger than expected.
Stocks dropped while bond yields climbed with the dollar as Jerome Powell signaled the peak in interest rates could be higher than anticipated as economic data have come in stronger than expected.
The hawkish tone of his prepared remarks to the Senate pushed the S&P 500 down as much as 1%, while driving the yield on 10-year Treasuries close to 4% again. The dollar climbed against all of the Group-of-10 currencies. Swaps showed a shift in bets on the March meeting — with a half-point hike being seen as slightly more likely than quarter-point move. The anticipated peak in the fed funds rate also jumped to more than 5.6%.
“Although inflation has been moderating in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy," Powell’s statement said.
His semiannual two-day testimony will be closely watched because it will probably be his last public remarks before the Federal Open Market Committee next meets March 21-22.
US payroll growth has topped estimates for 10 straight months in the longest streak in decades, a trend that, if extended, will boost pressure on the Fed to keep raising interest rates. Beginning in April last year, the median forecast in each survey of economists fell short of the government’s initial estimate of payrolls by an average of 100,000 a month — the most in data compiled by Bloomberg back to 1998.
Ahead of the February jobs report on Friday, the projection is for a 224,000 increase, which would be about half the pace seen in January.
Key events this week:
- Euro area GDP, Wednesday
- US MBA mortgage applications, ADP employment change, trade balance, JOLTS job openings, Wednesday
- Fed Chair Powell’s semiannual Monetary Policy Report to the House Financial Services Committee, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventories, Wednesday
- China CPI, PPI, Thursday
- US Challenger job cuts, initial jobless claims, household change in net worth, Thursday
- Bank of Japan policy rate decision, Friday
- US nonfarm payrolls, unemployment rate, monthly budget statement, Friday
Some of the main moves in markets :
Stocks
- The S&P 500 fell 0.9% as of 10:19 a.m. New York time
- The Nasdaq 100 fell 0.9%
- The Dow Jones Industrial Average fell 0.6%
- The Stoxx Europe 600 fell 0.7%
- The MSCI World index fell 0.9%
Currencies
- The Bloomberg Dollar Spot Index rose 0.7%
- The euro fell 0.8% to $1.0592
- The British pound fell 1.2% to $1.1886
- The Japanese yen fell 0.7% to 136.89 per dollar
Cryptocurrencies
- Bitcoin fell 1.4% to $22,095.16
- Ether fell 1.3% to $1,546.6
Bonds
- The yield on 10-year Treasuries advanced four basis points to 4.00%
- Germany’s 10-year yield declined one basis point to 2.74%
- Britain’s 10-year yield advanced two basis points to 3.89%
Commodities
- West Texas Intermediate crude fell 1.2% to $79.47 a barrel
- Gold futures fell 1.5% to $1,826.10 an ounce
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
