Dollar rises, yields fall after Powell’s remarks on inflation

NEW YORK (Reuters) – U.S. Treasury yields fell for a second day in a row and the dollar rose on Wednesday after Federal Reserve Chairman Jerome Powell said there was a risk that a U.S. central bank rate hike would slow the economy too much, but the bigger risk was persistent inflation.

The S&P 500 finished slightly lower, and looks set to enter the first half of the year for the US benchmark in more than five decades. Read more

“The clock is sort of working out how long you’re going to stay in a low inflation regime. … The danger is that because of the multiple shocks, you start to transition to a higher inflation regime and our job is to literally prevent that from happening and we will prevent that from happening,” Powell said at an ECB conference. Happening.” Read more

Investors are concerned that a strong push by the Federal Reserve to discourage inflation will push the economy into recession.

Investors are waiting for Thursday’s data on the personal consumption expenditures (PCE) price index, Matt Stuckie, senior portfolio manager at Northwestern Mutual Wealth Management Company.

“A moderate slowdown or recession is almost unanimous at this point as it relates to the economy,” he said. “The question from here is how much the Fed has to do to control inflation.”

A report released by the Commerce Department on Wednesday showed that the US economy contracted slightly more than expected in the first quarter, as the trade deficit widened to a record level and the resurgence of COVID-19 infections hit spending on services such as entertainment. Read more

Treasury yields fell as inflation fears haunted investors.

The yield on the 10-year Treasury fell 10.5 basis points to 3.102%, while the two-year yield fell 6.5 basis points to 3.059%.

In foreign exchange, the dollar index rose 0.593%, with the euro advancing 0.02% to $1.0441. Read more

On Wall Street, the Dow Jones Industrial Average (.DJI) The index rose 82.32 points, or 0.27%, to 31,029.31 points, the Standard & Poor’s 500 (.SPX) It lost 2.72 points, or 0.07%, to 3818.83 points and the Nasdaq Composite (nineteenth) It fell 3.65 points, or 0.03%, to 11,177.89 points.

Heading into the end of the month and the second quarter of the day, the S&P 500 may be poised for its biggest first-half drop since 1970.

Pan-European STOXX 600 Index (.stoxx) Lost 0.67% and MSCI’s gauge of stocks worldwide (.MIWD00000PUS) It drops 0.53%.

Oil prices fell, as rising US inventories of gasoline and distillates and concerns about slowing global economic growth outweighed supply concerns. Read more

Inflation fears have been largely driven by recent sharp gains in oil prices.

Brent crude futures for August delivery fell $1.72, or 1.5 percent, to settle at $116.26 a barrel. The August contract will expire on Thursday and the most active September contract is down $1.35 to $112.45. US West Texas Intermediate crude for August fell $1.98, or 1.8%, to settle at $109.78.

Spot gold fell 0.1% to $1,818.13 an ounce.

Bitcoin was last down 0.21% to $20,218.24.

Reporting by Caroline Valitkevich. Additional reporting by Sujata Rao in London, Stephen Kolb and Herbert Lash in New York; Editing by Margarita Choi and Alex Richardson

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