Schwab’s Flynn Says Time to Pause Rate Hikes Will Be Investor Focus – Bloomberg

The US stock market continued to rise on the 1st. Federal Reserve Chairman Jerome Powell said at a news conference after the Federal Open Market Committee (FOMC) meeting that the Fed was making progress in its fight against inflation. But he also warned that further rate hikes would likely be justified.

The S&P 500 stock index rose more than 1%. The Nasdaq 100 index, which is dominated by large tech stocks, rose 2.2%. “The process of disinflation has begun,” Powell said, suggesting that an aggressive tightening cycle was starting to have the desired effect of slowing the pace of inflation.

FOMC slows down interest rate hike to 0.25 points – further hike appropriate (3)

In after-hours trading after the close of normal trading, Facebook parent company Meta Platforms rose more than 15% at one point. Sales exceeded expectations, driven by strong advertising demand.

“Chairman Powell said financial conditions have tightened significantly, even though financial conditions have eased significantly,” said Neil Dutta, head of economics at Renaissance Macro Research. The very fact that he said is dovish,” he said. He added that the odds of the authorities “declaring victory prematurely” are increasing.

“The market is pricing in just one more rate hike, but the FOMC announcement suggests multiple more rate hikes could be in order,” said Ronald Temple, chief market strategist at Lazard. “I think the market is still too dovish about how high interest rates can go and how long they stay there, given today’s data, which suggests they’re close to record levels.”

Richard Flynn, managing director of Charles Schwab UK, said investors would shift their focus to when rate hikes are paused.

US Treasuries

U.S. Treasuries rise. Two-year bond yields fell 12 basis points (bp, 1bp = 0.01%) to 4.08%. The 10-year bond yield temporarily touched 3.38%. Fed Chairman Powell suggested a near-term rate hike was still on the agenda, but money markets priced in more rate cuts by the end of the year.

foreign exchange

In the foreign exchange market, the dollar index fell to its lowest level since April last year. After the FOMC slowed its pace of rate hikes, Fed Chairman Jerome Powell said the Fed was in talks to raise rates “about two more times.” euro rises. The European Central Bank (ECB) will announce a policy decision on Wednesday.

The yen rose against the dollar, reaching the upper 128 yen level. There was also a scene where 128 yen and 55 sen were attached at one time.

“The dollar is going down across the board,” said Valentin Marinov, head of G10 currency strategy at Crédit Agricole CIB. “The euro and the yen could be the unlikely winners,” he continued.

crude

The New York crude oil futures market fell to a sharp drop for the first time in about a month. Selling dominated after data from the U.S. Energy Information Administration (EIA) showed crude oil inventories to levels not seen since June 2021.

Inventories of petroleum products such as distillates also increased, despite relatively low utilization rates at refineries, the data showed.

Bob Yawger, director of futures at Mizuho Securities USA, said the data showed a lackluster demand picture.

West Texas Intermediate (WTI) futures for March delivery on the New York Mercantile Exchange (NYMEX) fell $2.46, or 3.1%, to $76.41 a barrel, the lowest level since January 10. rice field. The London ICE North Sea Brent April delivery fell $2.62 to $82.84.

Money

New York spot gold rose on Powell’s remarks. After the FOMC decided to raise the interest rate, it remained almost unchanged from the previous day until the chairman’s press conference. As of 3:21 pm New York time, an ounce was $1,942.51, up 0.7% from the previous day. At one point, it even went up by 1%.

“The FOMC statement itself was hawkish, but it was the opposite,” said Phil Stryble, chief market strategist at Blue Line Futures. “We see the end of the rate hike cycle in sight for the gold market,” he said.