{"id":1901,"date":"2023-03-08T17:02:39","date_gmt":"2023-03-08T22:02:39","guid":{"rendered":"https:\/\/embarrdowns.com\/feds-powell-warns-of-higher-interest-rates-markets-react-negatively\/"},"modified":"2023-03-08T17:02:40","modified_gmt":"2023-03-08T22:02:40","slug":"feds-powell-warns-of-higher-interest-rates-markets-react-negatively","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/feds-powell-warns-of-higher-interest-rates-markets-react-negatively\/","title":{"rendered":"Fed’s Powell Warns of Higher Interest Rates, Markets React Negatively"},"content":{"rendered":"

At his semiannual testimony before Congress on Tuesday, Federal Reserve Chairman Jerome Powell indicated that the central bank could raise interest rates further, as recent economic data has come in \u201cstronger than expected.\u201d[0]<\/a><\/sup> This implies that the ultimate level of rates \u201cis likely to be higher than previously anticipated,\u201d and that the Fed \u201cwould be prepared to increase the pace of rate hikes\u201d if necessary.[1]<\/a><\/sup> The markets reacted to this news, with the Dow Jones Industrial Average tumbling 1.7%, the S&P 500 index skidding 1.5%, and the Nasdaq composite giving up 1.25%.[2]<\/a><\/sup><\/p>\n

The yield on the 2-year Treasury note advanced to 4.892% on Monday, up from 4.876% on Friday, while the 10-year Treasury note rose to 3.981%, up from 3.962% as of late Friday. The yield on the 30-year Treasury bond climbed to 3.911% from 3.886% late Friday, and the yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.972%. The 2-year note yield has pushed above 5% for the first time since 2007, presently fetching 5.038%.[3]<\/a><\/sup> Currently, the difference between the two-year and ten-year note is the greatest it has been in decades.[3]<\/a><\/sup><\/p>\n

Powell also discussed inflation, which has dropped significantly from a summer peak but is more than triple the Fed’s target of 2%.[4]<\/a><\/sup> He warned lawmakers that Congress must raise the debt ceiling as the Fed does not have the tools to prevent or mitigate the economic catastrophe resulting from an unprecedented U.S. debt default.[5]<\/a><\/sup><\/p>\n

The markets are pricing in a 69.4% probability that the Fed will raise interest rates by another 25 basis points to a range of 4.75% to 5% on March 22, according to the CME FedWatch tool.[6]<\/a><\/sup> Furthermore, there is a 30.6% likelihood of a larger, 50-basis-point increase.[6]<\/a><\/sup><\/p>\n

The Federal Reserve has raised its benchmark rate to more than 4.5% – the highest rate since 2007 – responding to prices rising at the fastest pace in decades.[4]<\/a><\/sup> At the hearing, Democrats warned against drastic rate increases, saying that a recession triggered by the Federal Reserve would be particularly detrimental to lower-income people.[5]<\/a><\/sup><\/p>\n

0. <\/span>“Treasury yields dip as investors weigh Fed Chair Powell\u2019s remarks” CNBC, 8 Mar. 2023, https:\/\/www.cnbc.com\/2023\/03\/08\/us-treasury-yields-investors-weigh-fed-chair-powells-remarks-.html<\/a><\/a><\/p>\n

1. <\/span>“Why the next slate of economic data is so important” Axios, 8 Mar. 2023, https:\/\/www.axios.com\/2023\/03\/07\/economic-data-federal-reserve<\/a><\/a><\/p>\n

2. <\/span>“Dow Jones Futures RiseAfter ‘Faster’ Fed Chief Powell Hits Stocks; Tesla Falls On New Probe | Investor’s Business Daily” Investor’s Business Daily, 8 Mar. 2023, https:\/\/www.investors.com\/market-trend\/stock-market-today\/dow-jones-futures-faster-fed-chief-powell-hits-stocks-tesla-falls-below-key-level\/<\/a><\/a><\/p>\n

3. <\/span>“Gold, silver bulls work to stabilize their markets” Kitco NEWS, 8 Mar. 2023, https:\/\/www.kitco.com\/news\/2023-03-08\/Gold-silver-bulls-work-to-stabilize-their-markets.html<\/a><\/a><\/p>\n

4. <\/span>“US debt default could cause ‘longstanding harm,’ Fed Chair Jerome Powell says” ABC News, 7 Mar. 2023, https:\/\/abcnews.go.com\/Politics\/us-debt-default-cause-longstanding-harm-fed-chair\/story?id=97665681<\/a><\/a><\/p>\n

5. <\/span>“Five takeaways from Powell\u2019s House testimony” The Hill, 8 Mar. 2023, https:\/\/thehill.com\/business\/3890199-five-takeaways-from-powells-house-testimony\/<\/a><\/a><\/p>\n

6. <\/span>“\u2018Buckle up\u2019: Treasury yields edge near 4% as Powell testimony, jobs data loom” MarketWatch, 6 Mar. 2023, https:\/\/www.marketwatch.com\/story\/buckle-up-treasury-yields-extend-pullback-from-highs-as-powell-testimony-and-jobs-data-loom-78935ae1<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

At his semiannual testimony before Congress on Tuesday, Federal Reserve Chairman Jerome Powell indicated that the central bank could raise interest rates further, as recent economic data has come in \u201cstronger than expected.\u201d[0]<\/a><\/sup> This implies that the ultimate level of rates \u201cis likely to be higher than previously anticipated,\u201d and that the Fed \u201cwould be prepared to increase the pace of rate hikes\u201d if necessary.[1]<\/a><\/sup> The markets reacted to this news, with the Dow Jones Industrial Average tumbling 1.7%, the S&P 500 index skidding 1.5%, and the Nasdaq composite giving up 1.25%.[2]<\/a><\/sup><\/p>\n

The yield on the 2-year Treasury note advanced to 4.892% on Monday, up from 4.876% on Friday, while the 10-year Treasury note rose to 3.981%, up from 3.962% as of late Friday. The yield on the 30-year Treasury bond climbed to 3.911% from 3.886% late Friday, and the yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.972%. The 2-year note yield has pushed above 5% for the first time since 2007, presently fetching 5.038%.[3]<\/a><\/sup> Currently, the difference between the two-year and ten-year note is the greatest it has been in decades.[3]<\/a><\/sup><\/p>\n

Powell also discussed inflation, which has dropped significantly from a summer peak but is more than triple the Fed’s target of 2%.[4]<\/a><\/sup> He warned lawmakers that Congress must raise the debt ceiling as the Fed does not have the tools to prevent or mitigate the economic catastrophe resulting from an unprecedented U.S. debt default.[5]<\/a><\/sup><\/p>\n

The markets are pricing in a 69.4% probability that the Fed will raise interest rates by another 25 basis points to a range of 4.75% to 5% on March 22, according to the CME FedWatch tool.[6]<\/a><\/sup> Furthermore, there is a 30.6% likelihood of a larger, 50-basis-point increase.[6]<\/a><\/sup><\/p>\n

The Federal Reserve has raised its benchmark rate to more than 4.5% – the highest rate since 2007 – responding to prices rising at the fastest pace in decades.[4]<\/a><\/sup> At the hearing, Democrats warned against drastic rate increases, saying that a recession triggered by the Federal Reserve would be particularly detrimental to lower-income people.[5]<\/a><\/sup><\/p>\n

0. <\/span>“Treasury yields dip as investors weigh Fed Chair Powell\u2019s remarks” CNBC, 8 Mar. 2023, https:\/\/www.cnbc.com\/2023\/03\/08\/us-treasury-yields-investors-weigh-fed-chair-powells-remarks-.html<\/a><\/a><\/p>\n

1. <\/span>“Why the next slate of economic data is so important” Axios, 8 Mar. 2023, https:\/\/www.axios.com\/2023\/03\/07\/economic-data-federal-reserve<\/a><\/a><\/p>\n

2. <\/span>“Dow Jones Futures RiseAfter ‘Faster’ Fed Chief Powell Hits Stocks; Tesla Falls On New Probe | Investor’s Business Daily” Investor’s Business Daily, 8 Mar. 2023, https:\/\/www.investors.com\/market-trend\/stock-market-today\/dow-jones-futures-faster-fed-chief-powell-hits-stocks-tesla-falls-below-key-level\/<\/a><\/a><\/p>\n

3. <\/span>“Gold, silver bulls work to stabilize their markets” Kitco NEWS, 8 Mar. 2023, https:\/\/www.kitco.com\/news\/2023-03-08\/Gold-silver-bulls-work-to-stabilize-their-markets.html<\/a><\/a><\/p>\n

4. <\/span>“US debt default could cause ‘longstanding harm,’ Fed Chair Jerome Powell says” ABC News, 7 Mar. 2023, https:\/\/abcnews.go.com\/Politics\/us-debt-default-cause-longstanding-harm-fed-chair\/story?id=97665681<\/a><\/a><\/p>\n

5. <\/span>“Five takeaways from Powell\u2019s House testimony” The Hill, 8 Mar. 2023, https:\/\/thehill.com\/business\/3890199-five-takeaways-from-powells-house-testimony\/<\/a><\/a><\/p>\n

6. <\/span>“\u2018Buckle up\u2019: Treasury yields edge near 4% as Powell testimony, jobs data loom” MarketWatch, 6 Mar. 2023, https:\/\/www.marketwatch.com\/story\/buckle-up-treasury-yields-extend-pullback-from-highs-as-powell-testimony-and-jobs-data-loom-78935ae1<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":1900,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/1901"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=1901"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/1901\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/1900"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=1901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=1901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=1901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}