Ahead of speaking at the IMF's upcoming research conference, Federal Reserve Chair Jerome Powell acknowledges that the economy frequently defies predictions, emphasising that intellectual rigour must combine with flexibility when forecasting. The Fed Chair is expected to defend the institution's economic projections that incorrectly assessed inflation as transitory, praising staff for courageously making high-stakes estimates amid unpredictable shocks. Powell's impending remarks precede the FOMC's December meeting, when members will review fresh data on sales, hiring, and costs before deciding on interest rates, though futures signal the current 5.25–5.5 percent benchmark range could be the apex of tightening until either something breaks or reinflation goes overboard.
The Dow snapped its seven-day winning streak Wednesday as utility and energy stocks fell on lower crude prices, while the S&P 500 and Nasdaq stayed muted. Though Fed Chair Powell gave no rate hike clues in a speech, the 10-year Treasury yield dropped after an auction. Robinhood and eBay shares sank following underwhelming results, but Eli Lilly climbed on FDA approval for its weight loss treatment, Mounjaro, and the acquisition offer extension of POINT Biopharma.
Mounting apprehensions over the Federal Reserve's hawkish stance saw gold prices tumble to a 10-day low as demand for safe-haven assets waned as equity gained. However, the precious metal edged up slightly as Treasury yields dipped while investors eagerly awaited Fed Chair Powell's speech. Meanwhile, the UK sanctioned Russian gold producers like Nord Gold and Highland Gold Mining to curb Moscow's war funding and warn of potential gold laundering to bypass restrictions.
Crude prices tumbled to near 4-month lows as markets grew sceptical of steady consumption despite assurances from Saudi Arabia. Inventories swelled with the biggest build-up since February, while U.S. output and OPEC exports ticked upward, though severe winter cold snaps again threaten electricity as a lack of natural gas infrastructure leaves grids vulnerable to generator failures.
The dollar consolidated gains against the euro and yen after last week's sharp selloff, as traders expect the US economic slowdown to limit the Fed's ability to hike rates going forward. However, the greenback may continue a short-term recovery before resuming its downtrend, while yen intervention risk looms as it weakens past 151 per dollar. Major events ahead include US CPI and retail sales data that could impact currency markets next week.