Marketmind: Waiting for word from the Fed chief
2023.11.08 00:47
© Reuters. FILE PHOTO: Federal Reserve Board Chair Jerome Powell answers a question at a press conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy at the Federal Reserve in Washington, U.S., November 1, 2023. RE
A look at the day ahead in European and global markets from Kevin Buckland
Markets are largely in a holding pattern, with investors looking to two days of commentary from Fed Chair Jay Powell starting later in the day for a steer on whether U.S. rate hikes are indeed done.
Last week’s surprisingly soft jobs data heightened expectations that interest rates had peaked, but Fed commentary since then has warned against complacency in the fight against inflation.
For now, investors have dialled up wagers on near-term rate cuts, with the Fed funds rate showing better than 50/50 odds for one as early as May. The dollar’s prospects have also softened in line with the more sanguine outlook on rates.
In Asia time, long-term Treasury yields are stuck around 4.58% and the dollar is biding its time around $1.07 per euro.
Regional equities weren’t offering much steer for the European open, putting in a mixed performance. Generally, tech shares were up and energy shares were down, with sagging to multi-month lows.
While the Fed outlook dominates investors’ attention, there is plenty of central bank speak in store from Europe as well.
ECB President Christine Lagarde, ECB chief economist Philip Lane, Bundesbank President Joachim Nagel, Bank of Spain Governor Pablo Hernandez de Cos and Bank of England Governor Andrew Bailey, among others, take the podium at various events around the region. Meanwhile, euro area finance ministers will be meeting to discuss inflation and policy coordination.
A busy day on the corporate calendar as well, including earnings from Adidas (OTC:), Airbus, Bayer (OTC:), Continental and Credit Agricole (OTC:) – and that’s just from the first three letters of the alphabet.
Germany has consumer inflation data and there are retail sales figures for the euro region.
Key developments that could influence markets on Wednesday:
-Fed’s Powell gives opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference
-ECB’s Lagarde participates in Eurogroup meeting in Brussels
-BoE’s Bailey speaks at Irish central bank conference
-Germany HICP final (Oct)
-Euro area retail sales (Sep)
