US Two-Year Yield Eyes 5% Before Powell’s Remarks: Markets Wrap

US Two-Year Yield Eyes 5% Before Powell’s Remarks: Markets WrapShow more

(Bloomberg) -- The world’s biggest bond market remained under pressure, with traders sifting through a slew of remarks from Federal Reserve speakers on speculation that policymakers will be in no rush to cut rates.

Just hours away from Jerome Powell’s speech, US two-year yields came closer to the 5% mark. The dollar extended its rally into a fifth straight session. Equities wavered after their worst back-to-back selloff in more than a year. Traders also scoured a batch of first-quarter earnings amid hopes that Corporate America’s resilience will help counter concerns about high rates.

“Powell is likely to set the near-term market narrative,” said Chris Senyek at Wolfe Research. “The Fed Chair is always a wildcard.”

The S&P 500 hovered near 5,060. Solid earnings from two Wall Street giants — Morgan Stanley and Bank of America Corp. did little to spark risk appetite. Megacaps were mixed. UnitedHealth Group Inc. led gains in the Dow Jones Industrial Average after beating profit expectations. Treasury 10-year yields advanced seven basis points to 4.68%. The greenback headed for its biggest five-day gain in over a year.

Policymakers around the world are struggling to confront a surging greenback and lofty US interest rates, according to Mohamed El-Erian.

“Authorities are a little bit frozen around the world as to how do you react to a generalized dollar strengthening?” El-Erian, the president of Queens’ College, Cambridge and a Bloomberg Opinion columnist, told Bloomberg Television Tuesday. “How do you react to a generalized increase in interest rates in the US?”

Fed Vice Chair Philip Jefferson said Tuesday that while there has been considerable progress in lowering inflation, the Fed’s task of sustainably restoring 2% inflation is “not yet done.” His San Francisco counterpart Mary Daly reiterated late Monday there’s no urgency to adjust interest rates, pointing to solid economic growth, a strong labor market and still-elevated inflation.

Stock Market Today: Stocks nudge higher as Treasury yields, dollar ease

U.S. stocks nudged higher Wednesday, while Treasury yields and the dollar held steady, as investors looked to snap a three-day losing streak on Wall Street while closely eyeing Israel's expected response to Iran's weekend missile strike.

Big green Big Board
The S&P 500 opened 23 points, 0.46% higher in the opening minutes of trading, with the Dow up 120 points and the Nasdaq rising 71 points, or 0.47%.

Boeing the whistle
Boeing (BA) shares extended their recent decline in early trading, pulling the stock to the lowest levels in nearly 18 months, ahead of testimony from an employee to a Senate subcommittee on aircraft safety later today.

Boeing shares were marked 0.7% lower in pre-market trading to indicate an opening bell price of $169.35 each,

Stock Market Today

Tensions in the region, which accelerated sharply following Iran's unprecedented attack on Israeli soil late Saturday, have yet to fully work their way into global markets, with oil prices falling for the past three sessions and stocks largely tracking both Federal Reserve interest rate forecasts and the start to the first quarter earnings season.

Fed Chairman Jerome Powell's remarks to an economic forum in Washington yesterday triggered a larger reaction in both the bond and currency markets as he suggested that recent inflation data "indicate that it's likely to take longer than expected" before the central bank can confidently begin easing rates.

Right now, given the strength of the labor market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," Powell said.

"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," he added.

Rate traders have pared bets on Fed rate cuts in both June and July, and now suggest the first of likely two reductions this year will take place only in September.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.11% lower at 106.135.

Oil prices were also in the red, with Brent crude contracts for June delivery down 74 cents to $89.26 per barrel as traders unwind bets on supply disruptions tied to the prospect of a broader military conflict and eyed Energy Department data on domestic stockpiles and overall exports due out later in the session.

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