MACRO 4 minutes to read

Macro Brief: A look at Powell’s testimony

Christopher Dembik

Head of Macro Analysis

Summary:  Welcome to the first edition of Saxo's morning macro brief on the main events that will influence markets in the session ahead.


Today’s main focus will be the Fed, as Chairman Powell will deliver his  semiannual monetary policy testimony to the Senate today, and the House of Representatives on Wednesday. Powell should give further insights regarding the evolution of inflation, growth expectations and the Fed’s balance sheet. We expect him to confirm that the central bank will remain in pause mode for at least the coming months as the Fed collects more data about the economic situation.

This new “dovish” stance, which also confirms that the Fed is “data dependent” but also “market dependent” (the change of tone happened as markets started to worry about economic growth and the risk of recession) may be a positive news in the short term – investors show confidence again – but a worrying signal in the medium/long term. Looking at the chart below, a “dovish” Fed is not necessarily a good sign as it announces that an economic downturn is on the way. Sometimes good news (in the short-term) is bad news (in the long run). 
Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)