There was no new ground broken during the first day of FRB Chairman’s Congressional testimony. Powell essentially reiterated what he had said at the conclusion of the January FOMC meeting, that the Committee is in “no rush” to lower the overnight rate.
He described the labor market as “broadly in balance” and “not a source of significant inflationary pressures,” however inflationary pressures are still “elevated” but inflation expectations “appear to remain well-anchored.”
Powell was asked about the impact of tariffs, but he stated that “it would be unwise to speculate on tariff policy at this time.”
The longer end of the bond market sold off marginally on his testimony causing a steepening in the curve. The market is still expecting a rate cut to occur by September.
Equites were mixed as big tech declined marginally. META fell for the first time in seventeen trading days with some suggesting the parabolic move has been broken.
Today the CPI. Inflation is expected to decline nominally, maintaining the narrow range of the last 24 months.
Last night the foreign markets were up. London was up 0.05%, Paris down 0.07%, and Frankfurt up 0.25%.. China was up 0.85%, Japan 0.42% and Hang Seng up 2.64%.
Futures are flat ahead of the CPI. JP Morgan writes the S & P 500 could fall as much as 2% if the CPI data exceeds expectations.
The data was released, and it was moderately higher than expected on both the core and headline levels. The 10-year is off 1 ¼ points to yield about 4.64%. Equity futures are also down moderately on the data.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
