On Thursday, October 19, Federal Reserve Chairman Powell spoke at the Economic Club of New York.

Powell said that U.S. inflation data has cooled this summer, "this is a very favorable development." The nominal PCE (personal consumption expenditures price index) in September is expected to increase by 3.5% year-on-year, unchanged from the previous value, compared with the peak in June 2022. 7.1% was cut in half; core PCE is expected to increase by 3.7% year-on-year in September, lower than the 3.9% in August and the peak of 5.6% in February last year. Relevant data will be released next week.

He believes that inflation progress is not only related to the easing of supply disruptions in the post-epidemic era, but also benefited from the 18-month aggressive interest rate hike cycle that started in March last year, which cooled strong demand. But he warned that inflation may continue its downward trend in September, "but it is not very encouraging":

"Short-term core inflation measures for the latest three and six months are currently below 3%, but these short-term measures tend to be volatile.

Regardless, inflation remains too high and a few months of good data are just the beginning of building confidence that inflation will continue to fall to meet our objectives. We don’t yet know how long these lower readings will persist or where inflation will stabilize in the coming quarters. The road to fighting inflation may be bumpy and take some time to get there, but my colleagues and I are united in our commitment to get inflation down to 2% sustainably. "

When it comes to monetary policy, Powell reiterated that the Fed is "committed to taking a policy stance that is sufficiently restrictive on economic growth" and will keep policy restrictive until it is confident that inflation is sustainably reduced to the 2% target.

But he also maintained a seemingly neutral attitude; In fact, it is somewhat ambiguous. On the one hand, Powell did not rule out the possibility of raising interest rates again before the end of the year; but at the same time, he also mentioned multiple risks facing the outlook for monetary policy:

"The heightened geopolitical tensions brought about by the new round of Palestinian-Israeli conflict pose significant risks to global economic activity. The Federal Reserve is responsible for monitoring the impact of these developments on the economy, which remains highly uncertain.

A series of new and old uncertainties have made our task of balancing the "risk of excessive monetary policy tightening" and the "risk of too little tightening" more complicated.
 
Doing too little could allow above-target inflation to become entrenched, ultimately forcing monetary policy to fight inflation at a high employment cost. Doing too much could cause unnecessary damage to the economy.

The Fed is proceeding with caution given the uncertainty and risks, as well as the progress we have made. We will decide the extent of additional policy tightening and how long policy remains restrictive based on the amount of data we receive, the evolving outlook and the balance of risks. "

Financial reporter Nick Timiraos wrote that Powell's latest speech confirmed market expectations that there will be no interest rate hikes in November, "unless there is clear evidence that economic resilience will jeopardize the progress of cooling inflation." Timiraos published an article stating:

Powell suggested that as long as recent efforts to reduce inflation continue to make progress, rising long-term Treasury yields may cause the central bank to pause its historic interest rate hikes.

That's in part because the rapid rise in long-term interest rates over the past month threatens to slow economic growth and keep borrowing costs rising, effectively displacing another rate hike from the Federal Reserve.

Timiraos also pointed out in the article that strong economic activity makes it difficult for the Fed to announce an end to raising interest rates, and Powell did not do so on Thursday. But his comments noted that inflation has fallen recently and the labor market has cooled significantly, suggesting a more reassuring Fed policy stance and raising the bar for another rate hike in December or beyond.

Some analysts said that Powell's speech was basically in line with market expectations of a "hawkish tone" and reiterated that policy should be advanced "cautiously". It not only warned against premature complacency in cooling inflation, but also confirmed that "interest rates will remain at higher levels for longer." (higher for longer) general direction.

On Thursday, the sell-off in U.S. Treasuries continued, with yields repeatedly hitting multi-year highs. The yield on the benchmark 10-year U.S. Treasury note exceeded 4.99% and pushed up to 5.0%, continuing to set a new intraday high since July 2007. The two-year yield is sensitive to interest rates. The U.S. bond yield was close to 5.26%, hitting a new high since 2006 for three consecutive days. The surge in yields once again put pressure on U.S. stocks. The three major U.S. stock indexes closed down collectively for two consecutive days overnight, with the Nasdaq and S&P falling for three consecutive days.

In late trading, both the Nasdaq and S&P fell more than 1%, and the Dow fell nearly 300 points. The Nasdaq closed down 0.96% at 13186.18 points. The S&P closed down 0.85% at 4,278 points. The Dow closed down 250.91 points, or 0.75%, to 33414.17 points.

 
The U.S. 10-year benchmark Treasury bond yield was close to 4.99% during European stock trading, rising nearly 8 basis points during the day before falling back.

The 10-year U.S. bond yield fell below 4.93% before the U.S. stock market opened. During the U.S. stock market, the decline expanded rapidly after Powell began to speak. It once fell below 4.89% to refresh the intraday low, and then quickly rose above 4.99% and pushed up to 5.0%. Continue to refresh the high since July 2007. At the end of the bond market, it was about 4.99%, rising nearly 8 basis points during the day and rising for three consecutive days.

The 2-year U.S. Treasury yield was close to 5.26% during European stock trading, rising by about 3 basis points during the day. U.S. stocks flattened their gains after opening and turned down, falling to 5.21% in early trading. After Powell's speech, it first fell below 5.17% and then quickly rebounded to 5.20%. At the end of the bond market, it was about 5.16%, down nearly 7 basis points during the day.

The ICE U.S. Dollar Index (DXY) was close to 106.70 before the European stock market opened, rising less than 0.1% during the day. U.S. stocks fell below 106.00 in the short-term after Powell began to speak at noon. It fell below 106.00 for the first time since October 12, falling nearly 0.6% during the day, and then narrowed the decline. By the time U.S. stocks closed, the U.S. dollar index was hovering around 106.20, down about 0.3% on the day, Giving back gains from Wednesday's rebound.

 
Cryptocurrency markets did not follow U.S. stocks lower Thursday. As the geopolitical situation worsened, international gold rose rapidly to around $1,960. Subsequently, the safe-haven properties of Bitcoin were amplified by the market, and Bitcoin began to strengthen.

On the 4-hour chart, Ethereum strongly broke through the MA60 moving average, and the MACD indicator showed a golden cross. The recent trend of Ethereum has been generally weaker than that of Bitcoin. Once Bitcoin stabilizes at $30,000, Ethereum is expected to usher in a wave of compensatory gains.

Personal opinion, for reference only.

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SOL is one of the more popular currencies at the moment. On the daily chart, SOL formed an upward N-shaped trend above the moving average, and the MACD indicator also showed a golden cross. The upper pressure is at $27, 29, and 35 dollars.

Personal opinion, for reference only.

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Finally, share the recent promising cryptocurrencies:

1. BIGTIME

Big Time is the first release from Big Time Studio, an industry-leading Web3 game studio. Big Time is a multiplayer cooperative RPG adventure game that combines fast-action combat, NFT collection, and history. In the game, players travel through time and space to defend history and fight against a mysterious force that is gradually tearing apart the wall of history and time.

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2. CYBER

CyberConnect is a decentralized social graph protocol based on blockchain technology. It aims to subvert the traditional Web2 social model, thereby solving the problems of user data and personal information being monopolized by social platforms, and the inability of different platforms to communicate data and identity information.

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Personal opinion, for reference only.