With all eyes on the U.S. central bank this week, some investors are looking to a parade of Federal Reserve speakers to calm market volatility, saying the reaction to the Fed’s June meeting was too extreme.
The Fed last week signaled a potentially tougher stance on inflation and shifted projections for its first two rate hikes into 2023, sparking a selloff in U.S. stocks, boosting the dollar and flattening the Treasury yield curve in its fastest re-shaping since March 2020, according to Citi analysts.
However, those moves partially reversed on Monday as stocks rebounded and the dollar retreated.
Investors are now anticipating what message will come from Fed Chairman Jerome Powell, due to speak before Congress on Tuesday at 2 pm ET (1800 GMT), as well as several other key Fed officials making appearances throughout the week. Data is also due on housing and the Fed’s preferred inflation gauge.
“I expect Powell will try to reverse some of the damage last week’s Fed meeting did,” said Tom Graff, head of fixed income at Brown Advisory. “I don’t think they intended to communicate such a hawkish message.”
