Comic: Powell Says What Markets Want To Hear As Fed Signals July Rate…

By Jesse Cohen – U.S stocks looked set to extend their run to fresh record highs on Thursday, after Federal Reserve Chair sent his clearest signal yet that the U.S. central bank will cut interest rates for the first time in a decade later this month.

In to the House Financial Services Committee on Wednesday, Powell said that since Fed officials met last month, “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”

The Fed boss confirmed that the U.S. economy is still under threat from disappointing manufacturing activity, weak inflation and an ongoing trade war.

Powell added that the central bank will “act as appropriate” to sustain expansion as “crosscurrents” are weighing on the economic outlook.

Powell’s dovish testimony saw traders revive some bets on heftier easing at the Fed’s next policy meeting on July 30-31.

The chance of a 50-basis-point cut stood at around 33% Thursday morning, up sharply from just 3% at the start of the week.

A strong U.S. jobs report released late last week had tempered expectations the Fed will deliver a large rate cut at its July meeting.

The hearing took place against the backdrop of U.S. President Donald Trump’s frequent criticism of the Fed and the White House’s demands that the central bank lower rates.

Powell will resume his testimony, this time to the Senate Banking Committee, at 10:00AM ET (1400 GMT).

In the wake of Powell’s comments, the sagged, moving further away from a three-week peak, while the U.S. Treasury yield curve steepened.

The briefly broke above 3,000 for the first time, while the and also reached all-time highs.

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Reuters contributed to this report

Disclaimer: Fusion Media

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