Fed's Powell to Clarify Confusing Markets

Federal Reserve Chairman Jerome Powell will testify before Congressional lawmakers on Wednesday and Thursday, providing another opportunity for financial markets to absorb the prospect of further interest rate hikes this year. While the Fed clearly flagged an intent to raise the benchmark interest rate twice more in 2023 at their meeting last week, their decision to skip another rate increase in June left some investors uncertain about the central bank’s inflation-fighting resolve. Powell is expected to face criticism from Republicans about high inflation and calls for proceeding more slowly from Democrats. The short- to intermediate-term sections of the Treasury market could be in for a “pretty interesting jolt if Powell doubles down” on his hawkish message, while equities have proven to be “pretty resilient and not that sensitive to what Powell says,” given a fundamentally strong U.S. economy.