Fed Chair Powell Failed To Stop The Sell-Off In Bond Markets
S&P 500 futures are under pressure in premarket trading as Fed Chair Jerome Powell failed to calm bond investors and Treasury yields continued to move higher, putting pressure on tech stocks. While S&P 500 futures are down by about 0.7%, tech-heavy Nasdaq futures are down by more than 1.5% in premarket trading.
Powell stated that the economic recovery was strong but it was too early to talk about reducing stimulus to the economy. He added that the Fed will not rush to raise rates in case inflation moves above the 2% level.
The Fed expects that inflation will move higher in March – April but believes that any spike will be temporary. The bond market has a different opinion as the yield of 10-year Treasuries has recently touched the 1.75% level while the yield of 30-year Treasuries made an attempt to settle above 2.50%.
WTI Oil Pulls Back As Inventories Increase
The recent EIA Weekly Petroleum Status Report indicated that U.S. crude inventories increased by 2.4 million barrles. Gasoline inventories increased by 0.5 million barrels while distillate fuel inventories increased by 0.3 million barrels.
The report put additional pressure on oil which has recently lost upside momentum on signs of more problems with coronavirus in Europe.
Interestingly, higher oil prices failed to provide enough support to U.S. domestic oil production which stabilized just below 11 million barrels per day (bpd). In the longer-term, this is a bullish catalyst for the market.
Initial Jobless Claims Rise To 770,000
Initial Jobless Claims report indicated that 770,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 700,000.
Meanwhile, Continuing Jobless Claims decreased from 4.14 million to 4.12 million compared to analyst consensus of 4.07 million.
The reports were worse than expected and may put additional pressure on stocks.
For a look at all of today’s economic events, check out our economic calendar.