Morning bid: Awaiting word from Fed chief

Federal Reserve Board Chairman Jerome Powell answers a question at a news conference following a two-day closed-door meeting of the Federal Open Market Committee on interest rate policy at the Federal Reserve in Washington, US, November 1, 2023. REUTERS/Kevin Lamarque/File Photo Obtain Licensing Rights

A look ahead at European and global markets from Kevin Buckland

Markets are mostly in a holding pattern, with investors looking to two days of Fed Chairman Jay Powell’s comments starting later to guide whether a rate hike in the US is actually done.

Last week’s soft jobs data raised expectations for a rate hike, but the Fed’s analysis since then has warned against easing the fight against inflation.

Meanwhile, investors have placed bets on a near-term rate cut, and the Fed’s rate of interest is showing better than the 50/50 odds for one in early May. Dollar prospects also softened in line with the sanguine outlook on prices.

In the Asian period, the long-term Treasury yield is stuck at around 4.58% and the dollar is worth its time at around $1.07 per euro.

Reuters Graphics
Reuters Graphics

Regional allocations have not contributed well to the European open, resulting in a mixed performance. In general, technology stocks were higher and energy stocks were lower, with crude oil falling to multi-month lows.

While the Fed’s outlook dominates investors’ attention, there are plenty of big bankers talking shop 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, took the stage at various events in the region. Meanwhile, euro zone finance ministers will be meeting to discuss inflation and policy coordination.

It’s a busy day in the business calendar too, with earnings from Adidas, Airbus, Bayer, Continental and Credit Agricole – and that’s from the first three letters of the alphabet.

Germany has consumer inflation data and there are retail sales figures for the euro area.

Key developments that could impact markets on Wednesday:

The Fed’s Powell gives opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference

– ECB’s Lagarde participates in the Eurogroup meeting in Brussels

-Bailey of the BoE speaks at the Irish central bank conference

-Germany HICP final (Oct)

-Euro area sales (Sep)

Reporting by Kevin Buckland; Edited by Edmund Klamann

Our Standards: The Thomson Reuters Trust Principles.

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