Market Could be Overreacting to Powell’s Comments

Back in early October, news-reading algorithms, followed by traders and investors, reacted to Federal Reserve Chairman Jerome Powell’s statement that our central bank was “a long way” from getting rates to a neutral zone, which is the area in which interest rates are neither slowing the economy nor boosting growth. The subsequent market sell-off erased the S&P 500’s gains for the year, taking stocks down over 10 percent from their new highs hit in late September.



Going into Powell’s scheduled speech on Wednesday at the Economic Club of New York, President Donald Trump took a swipe at his Fed chairman, saying in an interview with the Washington Post, “I’m not even a little bit happy with my selection of Jay (Powell).”

The talk on the street Tuesday night was that this statement all but took a dovish tease off the table, as Fed watchers felt Powell would bristle rather than acquiesce.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza