Equity futures for Japan, Hong Kong and Australia pointed to declines after the S&P 500 almost wiped out its weekly advance, while losses in the Nasdaq 100 topped 2%. Treasury two-year yields, which are more sensitive to imminent policy moves, climbed above 5%. The greenback advanced against all of its G-10 peers on Thursday, with the Australian and New Zealand dollars falling the most in more than three weeks.
In the run-up to Powell’s address, Fed Bank of Boston President Susan Collins told Yahoo! Finance that rate increases may be necessary, adding that she wasn’t prepared to signal the peak point. Meantime, her Philadelphia counterpart Patrick Harker sees interest rates on hold for the rest of this year, and thinks policymakers have likely undertaken sufficient tightening, telling CNBC that “we’ve probably done enough.
“If Powell focuses on data dependency, that ought to help 10-year yields stabilize,” said Dennis DeBusschere, founder of the New York-based research firm. That would also provide a “tailwind” to the growth-versus-value trade, he noted.Another topic that has surfaced on Wall Street over the past few days is whether Powell will address the abstract, almost elusive number that many refer to as r-star. That’s a sort of “goldilocks” rate that neither stimulates nor restricts economic growth.
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