Inflation Above Fed's 2% Target, But Improving: Powell
Fed Chair Jerome Powell testified in Congress that inflation "remains above" the 2% target, but has shown improvement in recent months. More positive data could support the case for central bank interest rate cuts, Powell noted. The Fed's confidence in easing monetary policy is growing as inflation trends in the right direction, Powell emphasized.
Concerns about risks to the job market and economy if rates remain high for too long are also on the Fed's radar, Powell added.
Market Reaction:
STOCKS: Slightly up after Powell's comments
BONDS: U.S. 10-year yield edged higher
FOREX: U.S. dollar rose slightly
Expert Comments:
Jay Woods, Chief Global Strategist, Freedom Capital Markets, New York, mentioned that Powell's comments didn't provide a clear path to a rate cut, affecting rate-sensitive markets like the dollar.
Christopher Hodge, Chief Economist for the US at Natixis in New York, noted Powell's emphasis on inflation prospects and caution regarding the labor market, hinting at a possible pivot towards a rate cut in September.
Lawrence Gillum, Chief Fixed Income Strategist for LPL Financial, Fort Mill, South Carolina, expected minimal impact from Powell's testimony on the Treasury yield movement.
Peter Cardillo, Chief Market Economist, Spartan Capital Securities, New York, believes that Powell's remarks keep the possibility of rate cuts alive, predicting cuts in September and December.
Brian Jacobsen, Chief Economist, Annex Wealth Management, Brookfield, WI, suggested that Powell is setting the stage for a rate cut, with uncertainty on the exact timing.
Stephen Brown, Deputy Chief North America Economist, Capital Economics, mentioned that Powell's opening statement lacked clues on the timing of interest rate cuts, emphasizing the need for more positive data.
Analysis:
Overall, Powell's testimony indicates a potential shift towards a rate cut in the future as the Fed closely monitors inflation and job market risks. Investors should be prepared for increased volatility in rate-sensitive markets and keep an eye on upcoming data releases for further clarity on the Fed's monetary policy direction.
The World's Best Investment Manager Analyzes Recent Activity Data and Predicts September Interest Rate Cut
In a recent statement, Marc Chandler, Chief Market Strategist at Bannockburn Global Forex in New York, commented on the current market situation. He believes that despite the neutral tone in the opening statement, recent activity data suggests that a September interest rate cut is still a possibility. Chandler praised Powell's approach, stating that the lack of immediate market response indicates a successful delivery of the message. He also noted that Powell's acknowledgment of the cooling labor market reflects the impact of last Friday's jobs data.
Michael Ashley Schulman, Chief Investment Officer at Running Point Capital Advisors in Los Angeles, highlighted three key economic terms - strong, weakening, and normalizing - which could pave the way for a future Fed rate cut. However, Schulman emphasized that the Fed's decision remains dependent on incoming data.
Overall, the analysis from these top financial experts suggests that a September interest rate cut is still on the table. Investors should pay close attention to economic indicators and market reactions in the coming weeks to stay informed and make strategic investment decisions.