[Mercato USA]Powell exhibits hawkish stance even as stocks fall, rates slowly rise – Bloomberg

US financial markets were hit hard on Wednesday following the Federal Open Market Committee’s (FOMC) policy decision and Federal Reserve Chairman Jerome Powell’s press conference.

The stock market has fallen. Powell reiterated his hawkish stance, but also hinted that the end of the tightening cycle was nearing.

The S&P 500 stock index had remained positive from the previous day until the FOMC announcement, but there was a scene where it temporarily fell 1.3% during Fed Chairman Powell’s press conference. The Nasdaq 100 index, which focuses on big tech stocks, also erased gains. The FOMC slowed the pace to a 0.5 percentage point hike but hinted at further hikes.

The FOMC’s latest interest rate forecast showed that the Federal Funds (FF) rate target will end in 2023 at 5.1%.

Fed Chair Powell ‘still has a long way to go’ to 0.5pp even after rate hikes slow

“Powell has made it very clear that the FOMC is fundamentally uninterested in the dynamics of financial conditions between meetings and will monitor them over time,” said Gerard McDonnell of 22V Research.

“The most encouraging thing about Powell’s remarks is his acknowledgment that core inflation has eased more than expected,” said Bryce Doty, senior vice president at Sit Investment Associates. There is also evidence that it is significantly lower than the data used to calculate the index (PCI).” “This is important given that housing is a large part of the core CPI, so I wouldn’t be surprised if Powell uses this as the primary reason for holding off rate hikes at the FOMC meeting in May “, he has declared.

“The FOMC is silent on the likelihood of a recession, but most officials say risks are tilted to the downside,” said Seema Shah, chief global strategist at Principal Asset Management. economic outlook than they are admitting,” she said. “This should mark the end of the recent bear market rally,” she said.

US treasures

US Treasuries are also volatile. Yields rose briefly after the FOMC announcement but then fell. Monetary policy-sensitive two-year bond yields briefly exceeded 4.30%.

foreign currency

On the foreign exchange market, the dollar weakened almost entirely against the 10 major currencies. After the FOMC meeting, there was also a gain scene. The FOMC slowed the pace of rate hikes, even as it expressed concerns about inflation.

The dollar was up against the yen to 135.99 at one point. After the FOMC meeting, there were notable scenes where the exchange rate struggled at the 135 yen level.

FOMC Statement: War in Ukraine contributes to price pressures, weighs on global economy

raw

The New York crude oil futures market rallied for the third consecutive day. It hit a one-week high. Buying resumed after the International Energy Agency (IEA) said oil prices could rise next year.

The IEA said oil prices could rise in 2023 as international sanctions reduce Russia’s oil exports.

The IEA expects oil prices to rise next year as Russian exports decline

The FOMC signaled its determination to fight inflation by continuing to hike rates, but it was largely ignored.

West Texas Intermediate (WTI) futures contract on the New York Mercantile Exchange (NYMEX) for January closed at $77.28 a barrel, up $1.89 or 2.5 percent from the previous day. February delivery of London ICE’s North Sea Brent rose $2.02 to $82.70.

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