By Alun John and Noel Randewich
London / San Francisco (Reuters) – Stocks has climbed and yields of the US Treasury and the dollar dropped Friday after the president of the Federal Reserve Jerome Powell underlined a possible reduction in rates at the September bank meeting.
Wall Street’s actions gathered after Powell prevented himself from being involved in reducing interest rates, as he recognized the growing risks in the labor market while affirming that higher inflation risks remain.
His remarks, at the annual symposium of the central bank of Jackson Hole, are his last address as president of the Fed.
The composite S&P 500 and NASDAQ increased 1.5% and 1.7% respectively. The industrial average of Dow Jones jumped 2.2% for an intraday record.
Government bonds also praised the news with the two -year -old treasury yield at the rate of almost 10 basic points at 3.69%. Reference yields at 10 years fell from 6 BPS to 4.27%. [US/]
Powell’s previous speeches at the event often moved the markets, and this year’s remarks are particularly close, because his position was criticized by US President Donald Trump, providing concerns about the potential threats to Fed’s independence.
His comments open the door to a drop in rate at the meeting from the meeting from September 16 to 17 of the Fed, and although he put a heavyweight on the jobs and the inflation reports which will be received before that, the analysts said that Powell seemed to put a greater weight on the first.
“Given Powell’s amazing comments, it is logical that the shares and obligations are considerably up today,” said Tom Graff, director of investments at Facet.
“However, looking in the coming months, the rate reductions will not be sufficient to maintain the strength of the shares. The rate reductions will have to” work “in the sense that the economy resumes momentum,” added Graff.
Powell has offered little advice on speed or speed with which prices could continue to reduce, which probably excites Trump’s pressures, which claims that there is no risk of inflation and that the Fed should immediately reduce the rates.
European markets have echoed the movements of their American peers, but in a more silent way.
The Europe 600 Stoxx 600 index climbed 0.4%, while the yield in 10 years in Germany, the reference of the euro zone, fell from 3 BPS to 2.72%. [.EU] [GVD/EUR]
The Dollar index, which measures the greenback against a basket of currencies, including the Yen and the Euro, was down for the last time by 0.89% on the day to 97.73, after exchanging approximately 98.7 before Powell’s comments.
The euro gained 0.97% to $ 1,1717. Against the Japanese yen, the dollar weakened 1.1% at 146.74. [FRX/]
