"Powell's Remarks: Shaping Markets and Tackling Plunging Treasury Yields"

Traders are closely watching Federal Reserve Chair Jerome Powell's comments on Friday as it is the last opportunity for the central bank to shape market expectations before their December meeting. Powell faces the challenge of convincing the market that interest rates will remain high through 2024, despite easing inflation. Influential policymaker Christopher Waller's mention of rate cuts if inflation continues to decline has further complicated Powell's task. Market expectations have shifted, with a higher likelihood of rate cuts by the May meeting. This has led to a significant repricing in bond yields, causing the U.S. benchmark 2-year yield to drop around 27 basis points this week. The dollar has also weakened, while equity markets had a strong November.