US stocks, greenback rise on Powell testimony; oil silps

Bloomberg

US stocks rose, Treasuries fluctuated and the dollar advanced as investors weighed comments by Federal Reserve Chairman Jerome Powell saying the central bank won’t rush to raise rates even though the economy should pick up steam.
Powell’s testimony signalled optimism in economy, while data on durable orders fell well short of estimates and the US balance of trade worsened. The S&P 500 rallied for a fourth day, while Bloomberg’s dollar index pushed higher. The 10-year Treasury yield initially spiked on Powell’s seemingly hawkish tone, only to fall back to 2.86 percent.
The pace of US monetary policy tightening remains a hot debate on Wall Street and traders have been betting that Powell won’t seek to shock financial markets by moving towards more hawkish monetary policy. Fed Governor Randal Quarles made clear he thought a sustained period of higher growth might require higher interest rates.
“The markets are skittish,” Barry James, president and portfolio manager at James Investment Research in Xenia, Ohio, said.
The testimony is “probably confirming what everybody already knew, so I don’t know if it’s that much of a surprise. People are maybe a little bit oversensitive right now.”
Elsewhere, German bunds and UK gilts led a retreat in European bonds. Most industry groups in the Euro Stoxx 600 Index declined after Japan led Asian equities higher earlier. The won rose for a third day as the Bank of Korea left its benchmark interest rate unchanged. Oil slipped following a three-day rally as investors awaited US inventory data. South Africa’s rand handed back recent gains amid a cabinet reshuffle. Terminal users can read more in our markets blog.
Powell testifies before a House panel on Tuesday. He’ll discuss the Fed’s Semi-Annual Monetary Policy Report and the state of the economy. Powell returns on March 1 before a Senate committee. Companies announcing earnings this week include: Vale, Bayer and Lowe’s. The European Union will publish a draft Brexit treaty on Wednesday and UK Prime Minister Theresa May delivers a speech Friday on Britain’s relationship with the European Union. A barrage of data is expected out of Japan including retail sales and industrial production on Wednesday, and capital spending on Thursday. In China, the official and Caixin purchasing managers’ indexes on Wednesday and Thursday respectively may show growth momentum slowed slightly in February, though the signal may be clouded by the holidays.
The S&P 500 rose 0.3 percent at 10:22 am in New York. The Nasdaq Composite Index gained 0.2 percent. The Stoxx Europe 600 Index advanced 0.1 percent. The MSCI All-Country World Index declined.
The Bloomberg Dollar Spot Index climbed 0.4 percent. The euro declined 0.5 percent to $1.2249. The Japanese yen fell 0.3 percent to 107.23 per dollar. South Africa’s rand decreased 1.3 percent to 11.7111 per dollar, the biggest dip in almost three weeks. The British pound dipped 0.6 percent to $1.3889.
The yield on 10-year Treasuries was little changed at 2.86 percent. Germany’s 10-year yield gained two basis points to 0.67 percent.