The equity market fell broadly as hawkish comments from Uncle Powell’s congressional testimony sent chills to investors. It kills off any risk-on sentiments on his first day on Capitol Hill.
Through his conversations, he is more inclined towards raising rates as there are signs of inflation warming again. He will be speaking before the House Financial Services Committee today.
He had spoken about the robust January job report, which hints at the possibility of higher inflation than expected, and that would require more work on the Fed to tame inflation. This also means keeping rates elevated to water down economic demand.
Yield Curve Movement
The USD had risen decisively as the yield curve rose sharply. The yield curve deepens in its inversion, consistently with the idea of a looming recession. Investors will be most happy to buy the 10-year bond, which gives decent returns on investment and could help to keep the yield down from its peak.
We believe the yield curve inversion remains as long as the Fed persists in its tightening stance. And with that, it also set the stage for the job report on Friday, which could yet be another pivotal point for the equity market.
Nasdaq below short term support line
Using the same chart we shared yesterday, the QQQ, and Nasdaq rests just below the 297 support level, and the next support is around 290+. Hence, for any trading, it might be useful to take note of key levels.
What are our dishes today?
The ADP Nonfarm employment change is set to rise to 200K from 106K in the prior period when released at 9.15 pm.
At 11 pm, Uncle Powell will continue his second day of testimony.
It is 8 March, Wednesday, 8.44 am in Singapore and 7.44 pm in New York. It is a wild ride as we trade nimbly to better escape from any large swings in the market.
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