(News Bulletin 247) – Wall Street is expected to open lower on Wednesday, as Federal Reserve Chairman Jerome Powell’s comments on the likelihood of higher rates this year came as no surprise to market participants.

Half an hour before the opening, futures contracts on the major New York indices lost between 0.3% and 0.4%, announcing a start to the session in the red.

The Fed chief’s hearing before the House Financial Services Committee is not scheduled to begin until 10:00 a.m. (New York time), but investors were able to read his speech a few minutes ago.

In his address, Powell acknowledged that there was ‘still a long way to go’ in bringing inflation – a term cited 17 times in the document – below the 2% target.

“Almost all members of the monetary policy committee (FOMC) believe that it will be necessary to raise interest rates a little further by the end of the year,” he added.

The odds of seeing rates rise next month continue to be revised upwards, now standing at 76.9% from 19% a month ago, according to CME Group’s FedWatch.

Faced with this unaccommodating tone, investors could be tempted to liquidate some of their positions while waiting for the other statements that Jerome Powell could deliver before Congress, in particular during the question-and-answer session.

The reluctance of the equity markets is reflected in a new outbreak of fever on the bond market, with a yield on 10-year Treasury bonds which goes back well beyond 3.75%.

If the Fed encourages to withdraw from equities, participants seem to favor the dollar, which is rising towards 1.0920 against the euro, but also oil, with a barrel WTI up 0.2% to 71.3 dollars .

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