Ipek Ozkardeskaya
Swissquote Bank Ltd
Jerome Powell wants to see the US interest rates rise faster. At a speech titled ‘Restoring Price Stability’ yesterday, Powell told the National Association for Business Economics that there could be a 50-bp hike in May, and at subsequent sessions, if the Federal Reserve (Fed) officials conclude that it’s more appropriate to move faster.
Activity on fed funds futures hint that the probability of a 50-bbp hike stands near 65%, hinting that there is more to be priced in for the Fed hawks.
Still, the US 2-year yield could hardly rise faster, and the spread between the 2 and the 10 year is about to turn negative. A yield curve inversion is interpreted as a sign of a coming recession.
Market reaction to Powell’s hawkish speech was contained. The stocks in New York sold off as a kneejerk reaction, but almost erased all losses with a late session rebound, as investors thought that higher rates would be less toxic for companies than higher inflation in longer run.
Meanwhile, energy and commodity stocks remain in demand, as crude oil returns to $115pb. The next natural target for the bulls stands at the latest resistance of $130pb, if cleared will revive the speculation of a further advance toward the $150pb mark.
On the index level, the FTSE was the only winner yesterday in Europe as energy companies pushed the index higher with BP and Shell gaining more than 4% each.
In green news, the SEC now wants companies to disclose their green actions and Ethereum’s Merge update is getting closer to seeing the daylight as the last test has been running smoothly since March 15.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
Recommended Content
Editors’ Picks
EUR/USD rises toward 1.0850 as USD struggles to recover
EUR/USD has regained its traction and rose to the 1.0850 area after having retreated toward 1.0800 earlier in the session. The US Dollar struggles to stage a decisive rebound despite upbeat consumer confidence data from the US, allowing the pair to continue to push higher.
GBP/USD advances to fresh daily highs near 1.2350
Following a correction to the 1.2300 area, GBP/USD reversed its direction and advanced toward 1.2350. Although Wall Street's main indexes are trading mixed on Tuesday, the US Dollar stays on the back foot and helps the pair gather bullish momentum.
Gold: XAU/USD grinds north above $1,950 Premium
Spot gold trades near a daily high of $1,970.03 a troy ounce, as broad US Dollar weakness helped the metal recover some ground. XAU/USD trimmed half of its Monday’s losses, although a better market mood subdued demand for the bright metal.
Ethereum (ETH) options traders turn bearish ahead of the token unlock
Ethereum is holding steady above the $1,700 level despite slight bearish sentiment among options traders. Analysts have noted a rise in open interest in Ethereum, as co-founder Lubin assures that the altcoin is not a security.
S&P 500: With banking crisis in rear view, market pushes index closer to 4,000
The S&P 500 on Monday moved ahead cautiously without much fanfare after the US government agreed to sell $72 billion worth of Silicon Valley Bank assets to First Citizens Bank (FCNCA).