As investors await Powell’s address on Friday, they are keen to know about the prospects of Federal Reserve rate reductions. Markets suggest a nearly 70% chance of a reduction at the Fed meeting in September.
This follows some economic data indicating that inflation risks may be persistent despite labor market strength. Investors are becoming more worried about whether the Fed will be able to offer enough assurance to stem fears of future rate increases.
The US Treasury market, in the meantime, experienced a significant surge in yields as the 10-year yield rose to 4.33%, up 4.30% in the last closing. The increased bond yields also show the market’s worry about maintaining inflationary pressure.
Several Fed officials, including President Jeff Schmid of Kansas City and Raphael Bostic of Atlanta, have commented on the economic outlook, with some expressing comfort that the current stance of the US central bank is a suitable one, and others keeping a closer eye on the dangers of inflation.
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