US Stocks Hold Steady After Expectations Rise for the Federal Reserve to Raise Interest Rates
Traders raised the odds of a near-term Federal Reserve hike to almost 60% after Warsh said short-term rates are the central bank’s main tool.
- On Friday, Federal Reserve Chairman Kevin Warsh addressed investors at Jackson Hole, Wyoming, warning that inflation is not meaningfully slowing. The speech boosted rate-hike expectations, causing bond yields to zigzag while U.S. stocks remained steady.
- Persistent uncertainty clouded whether the Federal Reserve would back its rhetoric about hitting the 2% inflation target with actual policy action. Pressure mounted on the central bank to provide clarity on its strategy.
- Warsh stated Friday that "short-term interest rates are the predominant tool" for the Fed. He added, "I would be hard pressed to describe broad financial conditions as restrictive," implying rates may not be high enough to dampen inflation.
- Traders increased the probability of a Federal Reserve rate hike as soon as next month to nearly 60%, up from 35% previously. Two-year Treasury yields jumped to 4.34% from 4.22% immediately after his comments.
- Despite immediate rate-hike expectations, some analysts expect policy will be eased next year as economic growth slows and inflation pressures abate. Markets continue to monitor incoming data to gauge the central bank's future path.
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55 Articles
The Nasdaq index fell by 0.52%, the expanded S&P 500 index lost 0.25% while the Dow Jones finished close to balance (-0.02%). In his first speech to the annual meeting of central bankers in Jackson Hole (Wyoming), particularly expected by the markets, Fed Kevin Warsh's boss "reaffirmed (...) that the Federal Reserve was giving priority to the fight against inflation," explains Jose Torres, of Interactive Brokers. The latter has accelerated in re…
The Times-Tribune
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The Northern Virginia Daily
SooLeader.comUS stocks drift after expectations rise for the Fed to hike rates to get inflation under control
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Yakima Herald-Republic
US stocks rise with expectations for the Fed to hike rates to get inflation under control
U.S. stocks are ticking higher as expectations rise for the Federal Reserve to hike interest rates soon to get the nation’s high inflation under control. The S&P 500 rose 0.4% Friday. The Dow Jones Industrial Average added 208 points, and…
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