Anticipating News from the Federal Reserve Chair: What to Expect

Get ready for an inside look at what’s to come in the European and global markets with insights from Kevin Buckland.

As of now, the markets are at a standstill, as investors eagerly await two days of input from Fed Chair Jay Powell, set to begin later in the day, to gain some clarity on whether U.S. rate hikes are truly over.

Last week’s unexpected softness in jobs data has raised expectations that interest rates have reached their peak. However, recent remarks from the Fed caution against becoming too complacent in the battle against inflation.

Currently, investors are placing more bets on near-term rate cuts, with the Fed funds rate indicating a greater than 50/50 chance for a cut as soon as May. The dollar’s future has also weakened in line with the more optimistic outlook on rates.

In Asian markets, long-term Treasury yields are holding steady around 4.58% and the dollar is hovering around $1.07 per euro.

Regional equities are not providing much direction for the European market opening, with a mixed overall performance. Generally, tech shares are up, while energy shares are down, and crude oil has dropped to its lowest levels in months.

Although the Fed’s outlook is at the forefront of investors’ minds, there is also a plethora of central bank speeches scheduled across Europe.

Names such as ECB President Christine Lagarde, ECB chief economist Philip Lane, Bundesbank President Joachim Nagel, Bank of Spain Governor Pablo Hernandez de Cos, and Bank of England Governor Andrew Bailey are set to take the stage at various events in the region. Additionally, euro area finance ministers will convene to discuss inflation and policy coordination.

It’s a packed day on the corporate front as well, with earnings reports from Adidas, Airbus, Bayer, Continental, and Credit Agricole – and that’s just from the first three letters of the alphabet.

Germany will release consumer inflation data, and there are retail sales figures for the euro region to keep an eye on.

Here are key developments that could impact markets on Wednesday:

– Fed’s Powell delivers opening remarks at the Federal Reserve Division of Research and Statistics Centennial Conference

– ECB’s Lagarde participates in Eurogroup meeting in Brussels

– BoE’s Bailey speaks at Irish central bank conference

– Germany HICP final (Oct)

– Euro area retail sales (Sep)

(Reporting by Kevin Buckland; Editing by Edmund Klamann)


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