Displaying items by tag: powell

U.S. stocks ended mostly flat after the Federal Reserve held interest rates steady and signaled slower future cuts, while geopolitical tensions between Israel and Iran pushed oil prices higher. 

Fed Chair Jerome Powell emphasized that future rate decisions will remain data-dependent and warned of rising consumer prices this summer due to Trump’s new tariffs. Despite earlier gains, markets lost momentum following the Fed’s cautious tone; the Dow slipped 0.10%, the S&P 500 dipped 0.03%, and the Nasdaq edged up 0.13%. 

Meanwhile, Brent and WTI crude rose slightly amid fears of broader Middle East conflict and supply disruptions. U.S. Treasury yields, initially lower on safe-haven demand, rebounded after Powell’s comments on inflation. 

Finsum: Economic data added to uncertainty, with retail sales declining sharply in May and jobless claims suggesting weakening labor market momentum.

President Biden renominated Jerome Powell as Fed Chair on Monday this week in perhaps the purest bi-partisan reaction from the President since he entered office. The news was celebrated on wall street as both the bond and equity markets felt the reprieve. Additionally, Republicans on the senate banking committee rejoiced at the pick given Powell’s historical ties to the republican party. Powell was assumed to be in a close contest for the Fed position with Lael Brainard, but ultimately continuity was valued moving into the next phase of the post-covid recession. Still Powell’s road is difficult moving forward given sluggish employment and growth, and rising inflationary pressures.

FINSUM: This was a wise decision by Biden politically, and markets trust Powell to be dovish even as a republican which is the best of both worlds for the economy.

(Washington)

President Trump has been complaining about the Fed’s hawkish behavior for several months. However, yesterday he seemed to escalate his discontent into something more specific. He told the media that he “maybe” regretted appointing Powell to lead the Fed. He said he was intentionally signaling the Fed that he wanted lower interest rates, but he acknowledged that the Fed was an independent entity. When pushed about the circumstances under which he would fire Powell, the President declined to comment.

FINSUM: Investors should keep an eye on whether Trump escalates his rhetoric into action. We doubt he will do anything about the Fed in the near term, but the market would certainly have a big reaction.