[뉴욕증시-주간전망] Powell Congressional Testimony and Employment Attention

(New York = Yonhap News) Correspondent Yoon Young-sook of Yonhap Infomax = This week (6th to 10th), the New York stock market is likely to show significant volatility in Federal Reserve Chairman Jerome Powell’s testimony to Congress and the February employment report. .

Last week, the three major indices succeeded in rebounding, but it is unclear whether the rebound will gain momentum given that the possibility of prolonged tightening by the Fed has begun to be reflected in prices, starting with the January employment indicator.

In particular, Fed Chair Powell’s semiannual monetary policy report is highly likely to shake the market.

Chairman Powell will attend the Senate and House of Representatives at 10:00 am on the 7th and 8th, respectively, to answer questions from lawmakers on monetary policy.

Chairman Powell’s testimony to Congress this time is a monetary policy report in the first half of the year, and it is the third public comment since the regular meeting of the Federal Open Market Committee (FOMC) in early February.

Chairman Powell said at the press conference of the FOMC regular meeting that “the process of easing inflation has begun” and raised stock prices, but at the Washington DC Economic Club held on the 7th of last month, “If the indicators continue to be strong, we can raise interest rates beyond expectations.” , which brought down the stock price.

Chairman Powell’s testimony this time is likely to be closer to the latter.

This is because there is even a prospect that the Fed may raise interest rates by 0.50 percentage points at its March meeting, as all employment, inflation and consumption indicators released after the FOMC remain strong.

Contrary to these concerns, if Chairman Powell emphasizes that inflation will ease and a cautious approach is needed, stock prices will rise, but if the indicator continues to be strong, interest rates can be raised further, stock prices may decline. In particular, Chairman Powell’s remarks are important in that they will be a preliminary hint on how to read the hiring that comes out later in the week.

If Chairman Powell leaves open the possibility of a 0.50 percentage point rate hike in March, and if employment in February comes out stronger than expected, the market is likely to immediately give strength to the possibility of a 0.50 percentage point rate hike in March.

Currently, in the interest rate futures market, the possibility of the Fed raising interest rates by 0.25 percentage points at the March meeting is 70%, and the probability of raising interest rates by 0.50 percentage points is 30%.

Since February 3, when the January employment report came out, the stock price has turned downward. At the time, non-agricultural employment rose by 517,000, far exceeding the 187,000 expected by the market. Last year’s average monthly employment growth rate of 401,000 also far exceeded.

The Fed’s rate hikes last year were truly chilling news for markets that had hoped for a rate cut within the year due to a shallow recession at some point this year. The US 10-year Treasury yield also broke through the psychological resistance level of 4% last week, making investors nervous. Treasury yields have fallen below 4% again, but they could jump again anytime if the indicators are strong.

According to a tally compiled by the Wall Street Journal, economists expect nonfarm payrolls to rise by 225,000 in February. The unemployment rate was expected to remain at 3.4%, the lowest level in 54 years, the same as the previous month. Even if employment growth falls by half from last month, the fact that hourly wages will rise is expected to raise concerns about wage-led inflation.

Economists expect hourly wages to rise 4.7 per cent in February from a year ago, exceeding the 4.4 per cent rise in the previous month. Wages are inelastic relative to other prices, so if employment continues to be this strong, it seems to support the prospect that inflation will take longer than expected to come down. Economists see less than 100,000 jobs per month as a level of employment growth that will temper inflation.

This week, the Beige Book, the Fed’s economic assessment report, the private employment report compiled by ADP, the Ministry of Labor’s job announcement, and the Challenger’s job cut report will also be released. All are evaluation data on employment and competition.

The Dow Jones 30 Industrial Average rose 1.8% over the past week, and the S&P 500 Index rose 1.9% over the week. The Nasdaq Composite rose 2.6% over the same period.

The Dow and S&P 500 index rebounded in 5 and 4 weeks, respectively, and the Nasdaq index rose for 2 weeks in a row.

A scene from Chairman Powell’s press conference, shown on TV in the NYSE entrance hall.

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