Yahoo Finance Treasury Yields Dip Ahead of Another Day of Testimony by Fed Chair Powell
Profit-takers helped drive U.S. government debt yields lower on Wednesday, a day after Federal Reserve Chair Jerome Powell strongly suggested that the central bank could be open to more than three rate hikes in 2018.
On Tuesday, in his first testimony before Congress, Powell hinted that the central bank could raise interest rates three or more times during 2018 to prevent the economy from overheating.
“This is a time when we need to be alert to buildup of either financial imbalances or to inflation building up,” the Fed chief said. “We don’t really see those right now.”
Traders also reduced positions ahead of Thursday’s testimony by Powell. Rates could continue to rise if he reiterates his call for additional rate hikes. The consensus is that Powell is not likely to change his comments that send stocks and bonds sharply lower on Tuesday.
U.S. Equity Markets
The major U.S. stock indexes ended February on a weak note, ending a 10-month winning streak that was the longest since 1959.
Stock prices rose early in the session as Treasury yields eased, but a late session sell-off helped Wall Street wrap up a volatile month for the major indexes. More than half of the day’s losses came in the final hour of trading with the Dow losing more than 240 points in the final 60 minutes.
In the cash market, the benchmark S&P 500 Index settled at 2713.83, down 30.45 or -1.11%. The blue chip Dow Jones Industrial Average closed at 25029.20, down 380.83 or -1.50% and the tech-based NASDAQ Composite ended the session at 7279.39, down 50.96 or -0.70%.
Additionally, the Dow and S&P 500 Indexes snapped 10-month winning streaks and the NASDAQ posted a monthly loss for the first time in eight months. For the month, the blue chip and benchmark indexes closed lower by 4.3 percent and 3.9 percent respectively. The technology-based index closed February down 1.9 percent.
U.S. Economic Reports
A report on quarterly Preliminary Gross Domestic Product came in as expected at 2.5%, slightly below the previously reported 2.6%.
The Chicago PMI was lower than expected at 61.9. The forecast was for 64.2, slightly below the previous 65.7.
Pending Home Sales were a disappointing -4.7%. Last month’s report was revised lower to 0.0%. Traders were looking for a 0.4% increase. Most traders blamed rising mortgage rates for the decline.
This article was originally posted on FX Empire
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