Market Pause: As markets brace for Federal Reserve Chair Jerome Powell’s forthcoming speech, a pause ensues following a surprising dip in oil prices and bond yields this week.
China’s renewed fall in consumer prices sparks deflation concerns, impacting global commodity prices and easing October’s surge in long-term borrowing rates. U.S. crude, down over 20% since September, sees a substantial increase in inventories, the largest since February.
The energy-induced drop aids inflation metrics, pushing 10-year Treasury yields to their lowest since September 26. Despite mixed reactions to recent 10-year notes auctions, attention turns to Powell’s speech, with markets eager for insights into the recent bond yield rollercoaster and potential rate cut signals.
Also Read: Market Uncertainty Abounds: Rates, Oil, and Economic Growth in Focus
The S&P500 maintains gains, inching closer to the 4,400 level, with the VIX recording its lowest close since mid-September. Overseas markets, buoyed by positive European earnings and Chinese warnings on domestic stock speculation, show resilience.
In the entertainment sector, Hollywood actors reach a tentative agreement, resolving the second of two strikes that disrupted the industry. Walt Disney exceeds earnings expectations, while Warner Bros Discovery faces a 19% decline due to strikes and a weak advertising market.
Key developments shaping U.S. markets include Powell’s speech, U.S. Treasury Secretary Janet Yellen’s meetings with Chinese Vice Premier He Lifeng, weekly jobless claims, and a $24 billion auction of 30-year bonds. The market awaits Powell’s stance on recent bond yield fluctuations and whether he challenges market expectations of a Fed rate cut by June.