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Stocks ease ahead of Powell

European stock markets off to a negative start to the week, with indices posting small losses on Monday.

It hasn’t been the liveliest start to the week and the same themes are driving sentiment. Rising US yields continue to make investors nervous. They have pulled back as the day has progressed, which has eased the pressure on stock markets but the path of travel remains a concern, especially given the pace yields have been rising recently.

We’re not yet in taper tantrum territory but the Fed will need to very careful with how it communicates its intentions in the coming weeks. The spotlight this week will be on Jerome Powell as he faces lawmakers in Washington.

His testimony on the semi-annual monetary policy report will see him grilled by the Senate Banking Committee on Tuesday and the House Financial Services Committee. Considering the disagreement in both chambers on the size of Biden’s stimulus package, you can imagine the range of questions he’s going to be faced with.

The Fed Chair will need to choose his words very carefully to avoid spooking investors. They’re doing a perfectly good job of that themselves and taper talk could tip them over the edge. All this talk of frothy markets and rising yields is recipe for disaster.

UK planning for life without restrictions, in June, hopefully

The UK has set out plans to ease its way out of lockdown over the course of the next four months, starting with schools in two weeks. As has been the case so often over the last year, the leaks were rather accurate so there wasn’t really anything surprising in the announcement.

Prime Minister Boris Johnson was keen to stress that the dates laid out were minimum targets in order to avoid being back in a situation of once again reversing easing measures. New strains have complicated matters despite the successful vaccine rollout over the last couple of months.

The pound saw minimal gains from the announcement, with it being on the cautious side and in line with the leaks. Still, the currency has been on a very good run so far this year, driven by that vaccine success and what it means for the economy in the coming quarters.

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/ [1]

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam [5]

Senior Market Analyst, UK & EMEA at OANDA [6]
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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