Powell fails to deliver, markets are disappointed

05/03/2021

US stocks continued to sink Thursday after Federal Reserve Chair Jerome Powell made it clear that the central bank wouldn’t be changing its ultra-loose monetary policy any time soon.

Investors had anticipated Powell to announce some form of a yield curve control to combat the ongoing spike in longer-term yields. However, Powell failed to deliver, and frustrated investors sold equities and bonds. 

10-year bond yields shot to 1.58%, a level last seen in late February 2020.

From other news, oil spiked higher again as traders are still pricing in higher inflation. The WTI benchmark was trading at 65 USD, attacking 2020 highs on Friday, 

Precious metals were massacred yet again, with gold falling below 1,700 USD for the first time since early June, while silver fell below 25 USD. The last key support for gold is near 1,670/80 USD, where the uptrend line from May 2019 lows is converged with the summer of 2020 lows. 

The greenback has been supported by the rising yields, with the USDJPY pair up sharply nearly every day, trading above 108, while the EURUSD pair dropped below February lows of 1.1950.

Later in the day, the US labor market data are due, with markets expecting 182,000 new jobs added in February, compared with just 49,000 in January.
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