US Futures Dip, Dollar Up as Clock Ticks to Powell: Markets Wrap
US equity futures slipped Friday and the dollar climbed ahead of a much anticipated speech by Federal Reserve Chair Jerome Powell that’s set to shape views on the pace of US monetary tightening.
(Bloomberg) — US equity futures slipped Friday and the dollar climbed ahead of a much anticipated speech by Federal Reserve Chair Jerome Powell that’s set to shape views on the pace of US monetary tightening.
S&P 500 and Nasdaq 100 contracts were in the red while Europe’s made modest gains. An Asian stock index eked out a climb after a Wall Street rally Thursday.
Powell may restate the Fed’s resolve to keep hiking interest rates to fight high inflation when he speaks at 10 a.m. Washington time Friday in Jackson Hole, Wyoming. Fed officials gathering for the conference are already singing from a hawkish script, pushing back on expectations of tempered tightening.
Treasuries slipped, taking the US 10-year yield to 3.05%. Oil scaled $93 a barrel. Gold and Bitcoin wavered.
A rebound in stocks and bonds from June lows has left financial conditions at easier levels than before the Fed began its aggressive tightening campaign. The question is whether Powell will try to reset market expectations to ensure that the brakes continue to be applied to economic activity.
“The Fed does have a lot of work to do in terms of just talking markets to price in a potentially higher terminal rate,” Diana Amoa, chief investment officer for long-biased strategies, at Kirkoswald Asset Management LLC, said on Bloomberg Television.
US central bankers at Jackson Hole stressed the need to keep raising rates. Kansas City Fed President Esther George said that a peak higher than 4% can’t be ruled out. The bond market remains divided on whether the Fed will hike by 50 basis points or 75 basis points in September.
The latest US growth data pointed in different directions in the first half of 2022, adding to the ongoing debate on the health of the economy. Europe’s outlook is darkening due to a continuing surge in energy prices.
MSCI Inc.’s Asia-Pacific equity gauge edged up to a one-week high. Apparent progress on averting the delisting of Chinese shares in the US over an audit dispute helped sentiment.
What to watch this week:
- Fed Chair Powell speaks at Jackson Hole, Friday
- US personal income, PCE deflator, University of Michigan consumer sentiment, Friday
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Some of the main moves in markets:
- S&P 500 futures fell 0.1% as of 7:40 a.m. in London. The S&P 500 rose 1.4%
- Nasdaq 100 futures shed 0.2%. The Nasdaq 100 rose 1.8%
- Japan’s Topix index rose 0.2%
- Australia’s S&P/ASX 200 index added 0.8%
- South Korea’s Kospi index rose 0.2%
- Hong Kong’s Hang Seng index increased 0.7%
- China’s Shanghai Composite index fell 0.3%
- Euro Stoxx 50 futures climbed 0.5%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was at $0.9963, down 0.1%
- The Japanese yen was at 136.99 per dollar, down 0.4%
- The offshore yuan was at 6.8683 per dollar, down 0.3%
- The yield on 10-year Treasuries rose about three basis points to 3.05%
- Australia’s 10-year yield fell 10 basis points to 3.58%
- West Texas Intermediate crude was at $93.56 a barrel, up 1.1%
- Gold was at $1,757.91 an ounce, down 0.1%
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