🧸All eyes on Uncle Powell’s Speech📖

Equity markets broadly fell on Monday, a continual from Friday’s losses as market participants took profit off the table after a great run thus far. The focus is now on the Fed’s next move as investors are digesting the likelihood of more rate hikes again. 

Indeed, Friday’s job figure hint at a hot job market that could weigh down on the expectation that inflation may not drop as fast as one would initially expect. This could motivate the Fed to continue its hawkish stance and dampen economic activity further. Yet another piece of “too” good news is a lousy outcome for stocks. 

🎢Bond yields moving ahead of updating expectation📊

The bond market reflects an evolving narrative: we may not have a fast declining inflation. As a result, some analysts are pointing to the idea that the bond market activity is partly hedging on inflation bets. 

In particular, we see the 10-year yield rise above 3.6% from 3.4% in the prior week. Likewise, short-term interest 2-year yield rose to about 4.42%, and this movement is punishing technology-centric indexes such as the Nasdaq. 

📮What are our dishes today? 🔦

At 1.40 am, Uncle Powell will be speaking at the Economic Club of Washington. Investors will follow up on possible hints of the number of hikes ahead. Hence, any dose of clues could be a market mover. 

The concern is that the higher rate is having an impact on economic demand. Moreover, with monetary policy lag, there are clear signs of future downside risk to the economy, which could spoil the soft-landing narrative that has supported relatively bullish sentiments thus far.