US futures fall, dollar rises as clock ticks for Powell: markets close

US futures fall, dollar rises as clock ticks for Powell: markets close

(Bloomberg) — U.S. stock futures tumbled on Friday and the dollar rose as a chorus of Federal Reserve hawks set the stage for a much-anticipated speech by President Jerome Powell that is expected to shape opinions on the pace of the economy. monetary tightening.

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The S&P 500 and Nasdaq 100 contracts were in the red after the Wall Street rally on Thursday. Treasuries fell, taking the US 10-year yield to 3.07%. In addition to Powell’s speech on Friday, traders need to keep an eye out for a series of US data, including personal spending and the Fed’s preferred inflation measure, both of which should show price pressures easing.

European equities erased gains to set the benchmark Stoxx Europe 600 index on track for a second weekly drop, with media and travel the biggest declines. Miners surged as prices for iron ore, copper and other industrial metals surged after China’s latest effort to spur its sagging economy. European bonds fell.

Powell can reaffirm the Fed’s determination to keep raising interest rates to fight high inflation when he speaks at 10 am Washington time on Friday in Jackson Hole, Wyoming. Fed officials gathered for the conference are already singing from an aggressive roadmap, warding off expectations of moderate tightening.

A rally in equities 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 the brakes continue to apply to economic activity and whether that would hurt second-half equities rally.

Powell will likely “endorse the tightening of financial market conditions and therefore also the trend towards higher market rates in recent times, given that the Fed is still far from under control of inflation,” said Benjamin Schroeder, senior rate strategist at the Fed. ING. NV group. “Our economists see the risk that the core inflation reading will still rise.”

US central bankers in Jackson Hole stressed the need to keep raising rates. Kansas City Fed President Esther George said a spike of more than 4% cannot be ruled out. The bond market remains divided on whether the Fed will raise 50 basis points or 75 basis points in September.

The latest US growth data pointed in different directions for the first half of 2022, adding to the ongoing debate over the health of the economy. Europe’s outlook is dimming due to a continued rise in energy prices.

Brent crude has climbed to $100 a barrel. Gold and Bitcoin fluctuated. The MSCI Inc. stock indicator. in Asia-Pacific rose to a one-week high. The apparent progress in preventing Chinese stocks from closing 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 movements in the markets:

Actions

  • The Stoxx Europe 600 was little changed at 9:21 am London time

  • S&P 500 futures fell 0.3%

  • Nasdaq 100 futures fell 0.4%

  • Dow Jones Industrial Average futures are down 0.2%

  • The MSCI Asia-Pacific index rose 0.3%

  • The MSCI Emerging Markets Index rose 0.3%

Coins

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro was little changed at $0.9976

  • The Japanese yen fell 0.4% to 136.98 per dollar

  • The offshore yuan fell 0.3% to 6.8713 per dollar

  • The British pound fell 0.4% to $1.1782

titles

  • Yield on 10-year Treasuries rose four basis points to 3.07%

  • Germany’s 10-year yield edged up two basis points to 1.34%

  • Britain’s 10-year yield was little changed at 2.62%

goods

  • Brent crude rose 1% to $100.37 a barrel

  • Spot gold fell 0.4% to $1,752.08 an ounce

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