CFRA sees 3 clues from Powell’s Congressional testimony about the timing of rate cuts

Market research firm CFRA said it spotted three hints about the timing of a rate cut from Fed Chair Jerome Powell’s comments. Policy Certificate This week on Capitol Hill.

Powell appeared before the House Financial Services Committee on Wednesday, concluding his remarks. Two days with legislators Powell said Tuesday he would “not send any signals about the timing of any future actions,” during his testimony before the Senate Banking Committee.

“We think he has provided at least three pieces of evidence,” CFRA chief investment strategist Sam Stovall said in a note Wednesday, noting that traders in Federal Reserve Funds Futures Market The probability of a September rate cut rose to about 72% in response to Powell’s testimony.

• 1) Powell says US economy is no longer “overheated” – The Fed chairman told Senate lawmakers that the economy is basically where it was before the pandemic hit, with a strong but not overheated labor market.
• 2) Risks to inflation and employment are more balanced – Stovall said it appears the FOMC is “starting to get a little more concerned” about a slowing labor market.
• 3) Powell’s highlighting of further weakness in the economy and labor market “could be a reason to cut rates,” Stovall said.

Powell said he and his colleagues wanted to study more economic data.

“He’ll get what he wants from CPI and jobless claims on Thursday, plus PPI and consumer sentiment on Friday,” Stovall said, stressing that the Fed has not yet decided when to make its next policy move.

As Powell delivered a public message that the economic downturn is progressing, the S&P 500 (SP500)(SPY)(VOO) and the Nasdaq Composite (COMP:IND) closed at record highs on Wednesday.

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