Weak Sentiment After Jerome Powell’s Speech
Initially, US stocks responded to yesterday’s testimony from the new Fed Chair Jerome Powell with declines, but then they mildly stabilized. The greenback and yields, on the other hand, were boosted. As expected, the new Fed Chair Jerome Powell didn’t declare any policy changes but was optimistic about the future of the US economy and inflation. Fed fund futures are now pricing in 33.7% odds for 4 rate hikes in 2018.
The European Union issued its draft Brexit treaty. The document didn’t present any new information. Sterling fell some 40 pips versus the dollar. The currency is likely to remain fragile as the deadline to negotiate the transitional period is near at hand.
The sentiment in Asia is soft due to disappointing data. Chinese manufacturing PMI decreased from 51.3 to 50.3 in February and non-manufacturing PMI declined from 55.3 to 54.4. Meanwhile, Eurozone Consumer Price Index Flash Estimate rose 1.2% and Core Consumer Price Index Flash Estimate increased 1.0%. This positive numbers added to speculations about potential ECB rate hike.
The US is about to publish Gross Domestic Product, Pending Home Sales and Chicago PMI. Also, Jerome Powell will testify before the Senate Banking Committee.