U.S. stocks erase gain after Powell's take on rate cuts - BNN Bloomberg

The S&P 500 wiped out an advance that approached 1 per cent after the Fed Chair said that “if we need to raise rates higher we will. I think for now though, as we mentioned, we see the likelihood of credit tightening.” In another session of outsize moves in the bond market, Treasury two-year yields pared their retreat, but were still down by almost 20 basis points, breaching the 4 per cent threshold. The dollar remained lower.

As expected by the overwhelming majority of traders, the US central bank delivered another 25 basis-point hike. While officials indicated the tightening cycle is not over yet, they decided to leave their year-end forecast unchanged at 5.1 per cent. The Fed’s so-called dot plot, which the US central bank uses to signal its outlook for the path of interest rates, also showed its end-2024 projection rising to 4.3 per cent from 4.1 per cent.

Elsewhere, an unexpected surge in UK inflation has dashed any hope that the Bank of England is done with raising interest rates. Traders reacted by selling bonds, sending the yield on two-year gilts toward the biggest spike since September. Money markets fully priced in a quarter-point hike Thursday.

The European Central Bank will probably need to keep raising interest rates if markets stabilize, but officials need time to assess the full impact of recent turmoil, according to Governing Council member Pierre Wunsch. He spoke after ECB President Christine Lagarde pledged to take a “robust” approach that allows policymakers to respond to inflation risks as needed but also aid financial markets if threats emerge.

Officials last week raised rates by a half-point, defying turbulence to keep up the fight to restore price stability.Swiss National Bank rate decision and press conference, ThursdayUS Treasury Secretary Janet Yellen testifies to a House Appropriations subcommittee, ThursdayUS durable goods, FridayThe S&P 500 fell 0.5 per cent as of 3:06 p.m. New York timeThe MSCI World index rose 0.2 per centThe euro rose 0.8 per cent to US$1.0858The Japanese yen rose 0.7 per cent to 131.

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