(News Bulletin 247) – Wall Street consolidated on Tuesday evening in the wake of the hearing in Congress of Fed Chairman Jerome Powell, who reaffirmed the firm attitude of the institution in terms of rates.
At the end of the session, the Dow Jones fell 1.72%, while the Nasdaq Composite fell 1.25%.
During his appearance before the House Financial Services Committee, Jerome Powell warned that the Federal Reserve’s final rate could turn out to be higher than expected.
Given the strength of the latest economic indicators, the central bank is indeed preparing to accelerate its rate hikes, with the aim of restoring price stability.
The ‘dot plot’ – the graph that summarizes projections of future rate levels according to FOMC members – currently forecasts a final rate of 5.25% this year.
‘Based on Powell’s comments, it is highly likely that the ‘dot plot’ will show a final rate above 5.25%, commented analysts at Commerzbank.
The German bank now says it is forecasting a 25 basis point hike after the Fed’s next three strategic meetings, which would bring the upper limit on rates to 5.50%.
“But if the next economic data surprises on the upside, rate hikes of 50 basis points will again become likely, with the prospect of a final rate which could reach 6%”, estimates Commerzbank.
A new intervention by the Chairman of the Fed is scheduled today with the Senate Banking Committee.
This context of caution is not conducive to the rise in government bond yields, with ten-year Treasuries continuing to fluctuate around 3.97%.
On the foreign exchange market, the latest statements push the dollar up, which takes 0.9% against the euro, to more than 1.0580.
On the oil side, a barrel of American light crude (West Texas Intermediate – WTI) fell 0.8% to 79.8 dollars amid concerns about the economic situation in China.
The only indicator on the program, wholesale inventories fell 0.4% in January after an anecdotal increase of 0.1% in December.
In terms of values, Apple is losing 1.4% after announcing the launch of a new yellow finish for the iPhone 14 and iPhone 14 Plus, which means that the device will now come in six colors.
BlackBerry fell sharply (-12%) after warning that its fourth quarter results would be affected by an impairment charge.
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