The world’s biggest bond market surged as Jerome Powell downplayed the possibility of rate hikes and the Federal Reserve said it will shrink its balance sheet at a slower pace to ease strains in money markets.
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In a volatile session, the S&P 500 extended this week’s losses. In late hours, Qualcomm Inc., the world’s biggest seller of smartphone processors, gave a solid forecast for the current period.It was not one-way dovish – Powell did indicate that he is open to the possibility that there will be no cuts this year.
Powell stated that the Fed was “prepared” to cut rates “if the labor market weakens”, while hinting repeatedly at a higher bar for a rate hike and that it was “unlikely the next move is a hike” while reiterating the view that monetary policy is sufficiently restrictive to bring inflation back to the 2 per cent target over time.
This was - at the margin - a more dovish FOMC statement and the reaction in markets, both equity and Treasury yields reflect the Fed’s message that they need more data before an initial rate cut. Wall Street lore says traders should dump stocks in May to avoid the summer doldrums. But that strategy appears to have been a bust in recent memory.
BofA’s so-called Sell-Side Indicator ticked down 33 basis points in April to 54.6 per cent, bringing it just below its 15-year average, strategists led by Savita Subramanian wrote in a note to clients Wednesday.Amazon.com Inc.’s cloud unit posted the strongest sales growth in a year, a sign that the retailer’s most profitable unit is recovering from a slump as businesses resume spending on technology projects, including artificial intelligence services.
New York Community Bancorp Inc. posted results that were better than feared and executives outlined a plan for reshaping it into a more diversified and profitable bank.
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