Stock futures fluctuated and bond yields rose ahead of Federal Reserve Chair Jerome Powell’s much anticipated speech at Jackson Hole.
(Bloomberg) — Stock futures fluctuated and bond yields rose ahead of Federal Reserve Chair Jerome Powell’s much anticipated speech at Jackson Hole.
S&P 500 swung between gains and losses after data showed US consumer spending rose less than expected as a key inflation metric turned negative amid falling gas prices.
Treasury 10-year rates remained above 3%, while the dollar retreated.
Powell may restate the Fed’s resolve to keep hiking interest rates to fight high inflation when he speaks at 10 a.m. Washington time Friday in Jackson Hole, Wyoming.
Fed officials gathering for the conference are already singing from a hawkish script, pushing back on expectations of tempered tightening.
A rebound in stocks and bonds from June lows, fueled by speculation the Fed may turn more dovish as inflation peaks, has left financial conditions at easier levels than before the central bank began its aggressive tightening campaign.
The question is whether Powell will try to reset market expectations to ensure that the brakes continue to be applied to economic activity.
“The ‘dovish pivot’ played nicely into the hands of the perma-bulls that have waited impatiently for the stock market to recover,” said Craig Erlam, a senior markets analyst at Oanda.
“Attempts to correct this narrative have been brushed aside and the view today is that Powell may try to address this in a more forceful and convincing way. If he fails or gives the slightest impression that there is any substance to the dovish pivot narrative, we could see yields slip and stock markets end the week on a high.”
US central bankers at Jackson Hole stressed the need to keep raising rates.
Kansas City Fed President Esther George said that a peak higher than 4% can’t be ruled out. The bond market remains divided on whether the Fed will hike by 50 basis points or 75 basis points in September.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 were little changed as of 8:52 a.m.
New York time
- Futures on the Nasdaq 100 were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.5% to $1.0025
- The British pound rose 0.2% to $1.1851
- The Japanese yen fell 0.2% to 136.70 per dollar
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.05%
- Germany’s 10-year yield advanced four basis points to 1.35%
- Britain’s 10-year yield declined four basis points to 2.58%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures fell 0.7% to $1,758.70 an ounce
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