US Fed Chairman Powell speaks today in Sweden; investors are looking for clues ahead
US Fed Chairman Jerome Powell will speak on Tuesday and stock market investors will be looking for clues to market direction. The last time Powell spoke, markets held momentum. On January 10, Powell will speak at the Sveriges Riksbank International Symposium on Central Bank Independence, Stockholm, Sweden at 9:00 a.m. ET.
US stocks on Monday ended lower than the previous week’s close. After two Federal Reserve officials hinted that interest rates could rise above 5%, a stock market rally stalled and speculators anticipating a peak below 5% found cold water.
The head of the Fed Bank of San Francisco, Mary Daly, predicted that the central bank would raise interest rates to about 5%. Raphael Bostic, her counterpart in Atlanta, said policymakers should raise rates above 5% at the start of the second quarter and then remain on hold for “a long period.”
US CPI data for December due out on January 12 could be the key to the Fed’s monetary action. Although inflation is cooling, core inflation still appears untamed and the jobs sector is not showing much impact from interest rate hikes.
On January 31 – February 1, US Fed officials meet to announce the interest rate hike. Markets expect 25 basis points of a hike but December inflation data will be key to that.
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Corporate earnings season kicks off this week, and investors will focus on management commentary and guidance more than balance sheet numbers for the previous quarter. The Fed is tasked with avoiding hard landings on the economy, if it can, only time will tell.
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